The cost of family coverage offered through employers' health plans is expected to rise only modestly this year, but that still will push the average cost past $28,000 for family coverage, Milliman Inc. said in the 2018 Milliman Medical Index report.
The total cost of coverage for a family of four under an employer-sponsored preferred provider organization plan — including premiums and employees\\\' out-of-pocket expenses--rose 4.5% in 2018 to an average of $28,166, up from $26,944 in 2017, Seattle-based Milliman said it in its annual “Milliman Medical Index” report. While that is the second-smallest percentage gain in the history of the analysis that Milliman began in 2001, the $1,222 cost increase for a family of four is the thirteenth consecutive year that the annual increase has exceeded $1,100.
A big driver of group health care plan cost increases continues to be prescription drugs, though the 2018 increases are smaller compared to recent years. In 2018, prescription drug costs rose an average of 6%, bringing costs for family coverage to $4,888. By contrast, prescription drug costs increased an average of 8% in 2017 and 9.1% in 2016. How much prescription drug costs will increase in the future is a big unknown. "Drug costs will continue to be prone to volatility...as new and expensive drugs enter the market, lower cost alternatives emerge and drug price changes are deployed very quickly," Milliman said in its analysis. Hospital services, which include inpatient and outpatient care, account for the biggest chunk--50%--of health care costs. In 2018, inpatient and outpatient expenditures for families averaged $14,026, up 4.8%. While that increase was significantly higher than 2017's average increase of 3.9%, it was the third-smallest increase since Milliman began the annual surveys. Outpatient cost increases outpaced inpatient cost hikes, rising by an average of 5.2% in 2018 to an average of $5,395 for a family of four, compared to an average increase of 4.5% for inpatient care, bringing those costs to $8,631 for a family of four.
Employers paid more than 56%, or $15,788, of health plan costs this year, according to the analysis. Employees paid an average of $7,674 in premium contributions and $4,704 in out-of-pocket expenses, such as health care services that fall under their plans' deductibles. In recent years, as health care plan costs have climbed, employers, increasingly, have shifted more costs to employees. For example, employees now are paying nearly 44% of health care costs, up from just 40% in 2008. That cost shift to employees, the analysis noted, is because employers are finding it harder to absorb rising health care expenses. "Health care expenses have grown at rates that make it increasingly difficult for employers to continue funding the benefits. Employer responses, such as defined contribution funding or simply limiting their increases in their contributions to health care benefits, have transferred more of the expenditure growth to employees," the analysis noted.