Annual health care costs for a typical American family nearly $27,000

In 2017, the cost of health care for a typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan is $26,944, according to the Milliman Medical Index (MMI). While the increase from 2016 to 2017 was low (at 4.3 percent), the rate of increase is still well above the growth in the consumer price index (CPI) for medical services.

Of the $26,944 figure, employees’ typically pay $11,685 ($7,151 in premium costs and $4,534 in out-of-pocket costs), while employers typically pick up the rest of the tab. In 2001, employers paid 61 percent of costs while employees paid 39 percent. According to Milliman, in 2017, the same split is 57 percent and 43 percent. Employees are shouldering more of the health care cost burden than they were 16 years ago.

Prescription drugs account for 17.1 percent of total health care spend. In 2017, the MMI family’s prescription drug costs will reach $4,612. However, prescription drug expenses grew at 9.1 percent from 2015 to 2016, a lower rate the 13.6 percent increase in 2015.

Milliman noted that some stakeholders have held out hope that federal health care reform efforts would help control health care cost growth. The report stated, “So far, those efforts have had relatively little direct impact on the MMI, because the MMI represents health care costs in an employer-sponsored health plan, while the primary focus of health care reform has been on the individual insurance marketplace and Medicaid. The employer market tends to be one of the most stable markets for health insurance companies, and one of the most financially important for health care providers such as hospitals and physicians.”

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