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Healthcare costs for a typical American family of four reached $31,065 this year, according to the new 2023 Milliman Medical Index, which measures healthcare costs for individuals and families receiving coverage from an employer-sponsored preferred provider plan.
Costs for the average person, meanwhile, reached $7,221.
Overall, healthcare costs increased 5.6% this year, and have increased by about 4.8% annually since 2021 – the kind of year-to-year increase that was seen prior to the COVID-19 pandemic. Whether it’s a return to the status quo or a pandemic rebound, family healthcare costs have resumed their steady climb, the data showed.
“Healthcare cost inflation tends to trail general inflation by six to 12 months,” said Doug Norris, coauthor of the Milliman Medical Index. “While there have been some encouraging numbers on the general inflation front recently, we have a while before healthcare cost inflation catches up.”
Macroeconomic forces are further contributing to the upward direction in healthcare costs, authors noted. It’s not just inflation – the supply chain, labor shortages and strong job markets are all contributing factors.
WHAT’S THE IMPACT?
Employees are shouldering close to 60% of this year’s cost increase, the data showed, which is a possible sign that increased job mobility, along with the complexities of remote work, are giving employers a good reason to invest in benefits.
“Although employee out-of-pocket costs are not affected by pharmaceutical rebates directly, we know this growing component of pharmacy benefit management is a focus area for employers and the healthcare market,” said Deana Bell, coauthor of the MMI. “We project rebates to be 25% to 31% of drug costs. If rebates were shared with employees, as some have suggested, the average prescription drug cost for an employee would decrease by about 6%.”
Eyeing the future, authors said costs for individuals and families may decline as a result of healthcare price transparency. With hospitals and payers now required to publish their negotiated reimbursement rates, a systemic change in market dynamics could occur, particularly for employers that can harness the data to drive down costs.
THE LARGER TREND
The 2021 MMI showed that healthcare costs for a family of four decreased that year – the only year on record in which that happened.
The public health emergency bore witness to a 4.2% decrease in healthcare costs. Based on restated claims data, healthcare costs for a hypothetical family of four in 2020 were $26,078, compared to $27,233 in 2019.
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