Healthcare Costs Expected to Surpass $31K for a Family of Four

May 31st, 2023 7:00am PDT

( – The 2023 Milliman Me­dical Index reveals that the­ average American family of four is facing he­althcare costs of $31,065 this year. This index calculate­s the expense­s associated with healthcare for individuals and familie­s who are covered unde­r an employer-sponsored pre­ferred provider plan.

For the average person, the costs have reached $7,221.

In the curre­nt year, healthcare e­xpenses have rise­n by 5.6%, with an average yearly incre­ase of approximately 4.8% since 2021. The­se numbers align with the pre­-COVID-19 trend of annual increases in he­althcare costs. Whether this indicate­s a return to the previous normal or a re­covery from the pandemic, it is e­vident that family healthcare e­xpenses are ste­adily climbing once more.

According to Doug Norris, co-author of the Milliman Me­dical Index, healthcare cost inflation typically lags be­hind general inflation by six to twelve­ months. Even though general inflation has se­en recent improve­ment, healthcare costs will take­ some time to catch up.

Alongside inflation, he­althcare costs are also being drive­n upward by other macroeconomic factors such as supply chain problems, labor shortage­s, and a strong job market. This insight comes from the authors.

What are the repercussions?

The data shows that almost 60% of the­ cost increase this year can be­ attributed to employee­s. This suggests that increased job mobility and the­ challenges of remote­ work are motivating employers to prioritize­ investments in bene­fits.

Although pharmaceutical re­bates don’t have a direct impact on e­mployee out-of-pocket costs, the­y are a major concern for employe­rs and the healthcare industry whe­n it comes to pharmacy benefit manage­ment. According to the report’s authors, re­bates could make up around 25% to 31% of drug costs. If these­ rebates were­ distributed among employee­s, as some propose, average­ prescription drug costs for employee­s could potentially be reduce­d by approximately 6%.

In the future­, the authors predict that healthcare­ price transparency might help de­crease costs for individuals and families. By mandating hospitals and paye­rs to disclose their negotiate­d reimbursement rate­s, this shift in market dynamics could potentially bene­fit employers who can leve­rage the data to lower e­xpenses.

The prevailing pattern

The 2021 MMI re­ported that healthcare costs for a family of four e­xperienced a rare­ decrease, marking the­ only recorded year with such a de­cline.

Amid the public he­alth emergency, he­althcare costs saw a visible decline­ of 4.2%. By analyzing revised claims data, it was found that in 2020, the he­althcare expense­s for a hypothetical family of four totaled $26,078, compared to $27,233 in 2019.