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Survey Notes Health Care Costs More Than Double Since 2002

May 12, 2011
Related Topics: Health Care Costs, Benefit Design and Communication, Workforce Planning, Latest News

Health care costs for the average American family have doubled in less than nine years to $19,393 annually, according to the 2011 Milliman Medical Index released May 11.

In 2002, health care costs for the average American family of four enrolled in a preferred provider organization plan averaged $9,235, according to the study, published by the Seattle-based global consulting and actuarial firm Milliman Inc.

Although this year’s 7.3 percent increase over 2010 is the lowest annual rate of increase in more than a decade, the increase in total dollars of $1,319 is the highest in the history of the study, the consultant reported.

As has been the case in four of the past five years, employees are paying a larger share of the cost increase than their employers. Of the total $1,319 cost increase in 2011, employers bore $641 while employees shouldered the rest, averaging $403 in increased payroll contributions and $275 in additional cost sharing. This year, employees’ share of total costs is at an all-time high, having increased from 36.8 percent in 2005, the first year of the index, to 39.7 percent in 2011.

The study also found that substantial geographic differences in costs remain, with six of the 14 geographic areas studied exceeding $20,000 in total costs for a typical family of four.

The highest-cost city was Miami, where health care spending averaged $23,362; followed by New York, where health care costs averaged $22,785; and Chicago, where costs averaged $21,996.

The three lowest-cost cities were Phoenix, where costs averaged $17,336; Atlanta, where costs averaged $18,292; and Seattle, where costs averaged $18,536.

“These cost differences result from variation in local practice patterns and from differing costs for health care goods and services,” said Chris Girod, a Milliman principal and consulting actuary, in a written statement.

The greatest increase was found in outpatient facility costs, which grew by 10 percent in 2011. Milliman said 90 percent of the cost increase is attributable to increases in unit costs, while the rest is the result of increased utilization.

Hospital inpatient care experienced the next highest rate of growth, averaging 8.6 percent.  

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail


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