In 2015, the cost of healthcare for a typical American family of four covered by an
average employer-sponsored preferred provider organization (PPO) plan is $24,671
(see Figure 1) according to the Milliman Medical Index (MMI).1 The amount will
almost certainly surpass $25,000 in 2016.
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Growth rate up in 2015 due to prescription
drug prices. Last year’s 5.4% growth rate
was the lowest in the history of the MMI and
stands out compared with 10 years ago when
the three-year-average annual growth rate
was approximately 10%. This year, the growth
rate has again climbed, increasing to 6.3% in
2015 (see Figure 2), largely due to increases in
prescription drug costs. Even at last year’s low-water
mark of 5.4%, the annual rate of increase
is still well above growth in the consumer price
index (CPI) for medical services.2
- Costs for our typical family have more than
doubled over the past decade. The cost for
this family has nearly tripled since Milliman began
tracking this information in 2001.
- Cadillac tax approaching? Perhaps. A family
of four with the MMI plan is likely to reach the
Cadillac tax much sooner if the plan is provided
by a smaller employer and if trends exceed
Pharmaceutical costs spike in 2015.
Prescription drug costs spiked significantly,
growing by 13.6% from 2014 to 2015. Growth over the previous
five years averaged 6.8%. The 2015 spike
resulted from the introduction of new specialty
drugs as well as price increases in both brand
and generic name drugs, increases in use of
compound medicines, and other causes. Since
the MMI’s inception in 2001, prescription drugs
have increased by 9.4% on average, exceeding
the 7.7% average trend for all other services.
Prescription drug costs now comprise 15.9% of
total healthcare spending for our family of four,
up from 13.2% in 2001. In a special section of
this report, we examine prescription
drug trends in greater detail.
- Employees continue to shoulder an increasing percentage of healthcare expenses. The total employee cost (payroll deductions
plus out-of-pocket expenses) increased by approximately 43% from 2010 to 2015, while employer costs increased by 32%. Of the
$24,671 in total healthcare costs for this typical family, $10,473 is paid by the family, $6,408 through payroll deductions, and $4,065 in
out-of-pocket expenses incurred at point of care.
Looking forward, when and how future annual rates of increase will continue to change is unclear and may depend on a number of factors.
One factor is the Patient Protection and Affordable Care Act (ACA) as it has both direct and indirect influences on the costs for our family
of four. This year’s MMI takes a deeper dive into how some of these factors may drive future healthcare trends.