Health care costs for a family of four have doubled in less than a decade from $9,235 in 2002 to over $19,000 in 2011

Health care costs for a family of four have doubled in less than a decade from $9,235 in 2002 to over $19,000 in 2011

How Expensive Is Healthcare?

CNN Money reports that in 2011, American families who are insured through their jobs average health care costs of $19,393 this year, up 7.3%, or $1,319 from last year, according to independent actuarial and health care consulting firm Milliman Inc.  of Fiercehealthpayer.com also highlights a new report from the Commonwealth Fund. It shows that:
  • Healthcare costs have risen by more than 60% between 2003 and 2011.
  • They will likely continue growing unless the health insurance market is completely overhauled.

How do rising costs affect the average family? Kaiser Health News reports that the costs for an average family to obtain insurance coverage:

  • grew to $15,022 in less than 10 years.
  • They have grown five times faster than family incomes, which have risen only 11 percent.
  • Deductibles more than doubled for consumers with employer-based coverage, meaning employees are paying more to receive fewer benefits.
  • If costs keep increasing at this pace, the average family of four will pay about $25,000 a year for health insurance in 2020, according to NBC News.

What’s the Cause?

The problem, according to the report and an article on The Hill’s Healthwatchis wasteful and duplicative pricing throughout the private insurance market. The report states:

“Within the private insurance market, prices paid for care have been rising rapidly and vary widely for the same service across states, and often for the same providers, depending on the source of insurance.

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According to CNN Money, of the $1,319 annual increase in 2011, workers’ out-of-pocket costs rose 9.2% – more than the 6.6% increase the prior year.

Payroll deductions for insurance coverage rose 9.3%, also more than the year before.

Of the $19,393 overall annual cost, employees’ share is inching closer to 50%, said Lorraine Mayne, principal and consulting actuary with Milliman:

“Employees are paying $8,000 of the $19,000. That’s a decent amount much larger than other areas of consumer spending.  What we’ve observed in the past few years is employers have increasingly been offering health plans with higher deductibles and co-insurance, co-payment limits,” she said.

Health reform so far has had very limited impact on curtailing these costs, said Mayne.

While reform’s new provisions such as eliminating lifetime benefit limits and removing copays on preventive care have changed rules for who pays for cost of care, they haven’t made any impact on the total costs of care, she said.

Most Expensive Parts of your Health Care

The report showed that physician costs represent 33% of a family’s overall health cost. Hospital inpatient costs account for 31%, outpatient costs, 17%, pharmacy, 15% and other expenses such as for medical equipment about 4%.

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