Healthcare Cost For Typical Family Hits New Record

The annual cost of healthcare for a typical American family – two parents and two children covered by an average employer-sponsored preferred provider organization (PPO) – will be $28,166 this year on average, according to the 2018 Milliman Medical Index released earlier this month. That’s over $2,300 a month.

Healthcare costs have risen every year since Milliman, a large international actuarial and consulting firm, began tracking them in 2001. The good news, if we can call it that, is the rate of increase has slowed modestly in recent years. Even so, the increase of 4.5% in 2018 translates into a price hike of more than $1,200 this year for the typical family of four.

One of the authors of the Milliman report for 2018 remarked that it’s good to see the rate of increase in healthcare costs slowing modestly. But the cost still goes up every year and will be over $28,000 this year for the typical American family, another new record high.

Prescription drug costs are still rising as well, although the 6% increase in 2018 is the smallest in the past three years and well below the double-digit annual price hikes seen a decade ago.

The increased healthcare costs are not shared evenly between employees and employers. Employees bear more of the cost increases. The larger increase for employees in 2018 is part of an ongoing trend. The Milliman report stated:

“Over the long-term, we have seen employees footing an increasingly higher percentage of that total. That trend continues in 2018, with employee expenses increasing by 5.9% while employer expenses increased by only 3.5%.”

More Americans Giving Up Health Insurance Due to Cost

With health insurance costs rising year after year, it comes as no surprise that more and more American families are ditching their coverage and hoping for no major medical expenses, which is a serious gamble.

Across America there are millions of families making the hard decision to go without health insurance, despite the benefits. They’re risking it – betting that they’ve got enough savings to cover their healthcare costs and/or enough luck to avoid a major medical expense.

Some 27.5 million Americans under age 65 were uninsured in 2016, about 10% of that age group, according to the Kaiser Family Foundation. The most common reason: the cost of health insurance was just too high.  The cost for most people to buy a health plan – even if they get it from their job or the government – is higher than ever.

A recent Gallup poll suggests that, after declining for years, the percentage of adults without health coverage has increased since the end of 2016, when President Donald Trump was elected and promised to dismantle Obamacare.

Speaking of Obamacare, it is only fair to note that the share of Americans without health insurance fell significantly in the four years after the Affordable Care Act extended coverage to almost 20 million people. But as noted just above, that number began to rise again in late 2016.

The Affordable Care Act wasn’t just an expansion of insurance coverage. It also rearranged how Americans’ medical costs are distributed, favoring some and asking others to pay more.

People near the poverty line got Medicaid for free, while those making more – up to about $100,000 for a family of four – got subsidies to lower the price of private health plans. Above that threshold, people pay the entire price of their coverage.

Because the law barred insurance companies from charging sick people more or refusing to cover them entirely, costs for healthy people went up as well. Some insurers have left the market altogether, while others have sharply raised premiums to compensate for actions taken by Congress and the Trump administration to weaken the law.

As always, there’s plenty of evidence that having insurance is a good thing. People with health coverage spend less out of pocket on medical care and are less likely to go bankrupt. They see the doctor more often and get more preventive care. In general, they’re less depressed and tell researchers they feel healthier. Numerous studies conclude that having health insurance delays the likelihood of death. Of course it does.

Most Americans are at least somewhat aware of these benefits. Yet more and more families just can’t afford the high costs. Premiums and deductibles are rising. Networks are shrinking. And even some well-off Americans are questioning what they’re paying for.

The bottom line is that at the end of 2016, over 27 million Americans under the age of 65 had no healthcare insurance. And that number may be quite conservative.  In any event, it is rising again, and our leaders in Washington have no answers. What else is new?