Health care costs increase for Americans

For the year of 2011, costs are up 7.3%. This trend will be continuing in 2012, I can assure you.

Health care costs for a family of four rose again in 2011, with employees paying a much larger share of the rising expenses, according to a new industry report Wednesday.

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 the seventh-annual Milliman Medical Index from independent actuarial and health care consulting firm Milliman Inc.

More significantly, employers are making workers shoulder an even bigger share of total health care expenses.

Of the $1,319 annual increase, workers’ out-of-pocket costs this year rose 9.2% compared to a 6.6% increase last year and their payroll deductions for insurance coverage rose 9.3% compared to an 8% increase in 2010.

However, employers’ share of workers’ health care costs fell 6% in 2010, compared to 8% the year prior.

Of the $1,319 more that companies and workers are spending on health costs, employers are paying $641.

Employees are shouldering a bigger chunk, paying $403 in payroll contributions and $275 in additional costs.

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,” said Mayne.

“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.

Companies are doing this in order to control their own costs and to force workers to use medical care more selectively, 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.

Elsewhere, hospital inpatient costs account for 31%, out patient costs 17% and pharmacy costs 15% and other expenses such as for medical equipment about 4%.

Milliman also looked at 14 cities across the United States where health care expenses are substantially higher than the national average.

Among them, Miami, New York City, Chicago and Boston ranked as the top four where health care costs for an insured family of four is more than 100% higher than the national average of $19,393.

But those same costs in Phoenix, Atlanta, and Seattle are under $19,000, the report said.

The Milliman Index is based on industry data and a survey of more than 4,000 employers.