Tag Archives: Employer Costs

Typical Family of Four Now Paying Over $28,000 for Health Care

A report issued Monday by Milliman indicated that the cost of health care for a typical American family covered by the average employer-sponsored preferred provider organization (PPO) plan in 2018 is $28,166, as per the Milliman Medical Index (MMI).

Broken down into component parts, this represents the following costs:

2018 MMI Components of Spending
31% ($8,631) – Inpatient
19% ($5,395) – Outpatient
29% ($8,275) – Professional services
17% ($4,888) – Pharmacy
4% ($995) – Other (Home health, ambulance, DME, prosthetics)

The key takeaway from the report is that employers are paying more; but employees are paying a lot more.

The health care expenditures are funded by employer contributions to health plans and by employees through their payroll deductions and out-of-pocket expenses incurred when care is received, according to the report.

The report continues that they are seeing over the long-term, and that employees are paying a higher percentage of the total, with employee expenses increasing 5.9%, and employer expenses increasing 3.5% in 2018.

The total cost of health care is shared by both the employer and employee for a family of four, the MMI stated, which breaks down to three categories:

1. Employer subsidy. Employers that sponsor health plans subsidize the cost of healthcare for their employees by allocating compensation dollars to pay a large share of the cost.
2. Employee contribution. Employees who choose to participate in the employer’s health benefit plan typically also pay a substantial portion of costs, usually through payroll deduction.
3. Employee out-of-pocket cost at time of service. When employees receive care, they also often pay for a portion of these services via health plan deductibles and/or point-of-service copays.

The relative proportions of medical costs for 2018 are:

56% ($15,788) – Employer contribution
27% ($7,674) – Employee contribution
17% ($4,704) – Employee out-of-pocket

Looking at this another way, employees are paying a total of 44% as either a contribution or out-of-pocket, which adds up to $12,378, compared to the employers’ 56% and $15,788, respectively.

As health care gets more expensive, it will naturally lead to higher costs for employers, but also higher costs for employees. And as has been happening more commonly, employers are shifting more of the costs onto the employees. With stagnant wages, as reported daily in the news, this is going to be a problem for those families caught in the squeeze between rising costs for medical care and stagnant wages.

This would be resolved by creating a single payer health care system that will save both employers and employees money,

 

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Workers’ Comp Medical Benefits Represent More Than Half of Employer Costs

The National Academy of Social Insurance (NASI) recently issued its 20th annual report on Workers’ Compensation: Benefits, Coverage, and Costs. The study provides estimates of workers’ compensation payments—cash and medical—for all 50 states, the District of Columbia, and federal programs providing workers’ compensation.

Much of the study, as reported today by Workers Comp Insider.com, deals with the decrease in benefits as a percentage of payroll, an issue outside the purview of this blog.

But I was intrigued by the graphic at the bottom, which stated that thirty-three states spent more than half their workers’ compensation benefits on medical costs for injured workers.

And the share of total costs of workers’ comp benefits that are medical costs rose from 1980 to 2015, from 29% to 50%.

WC Benefits

While the study does not provide any insight into what that 50% represents, it is conceivable to assume that a good part of it involves surgery to repair the injury the worker suffered.

So, if this study is right, then the only way to begin to bring down the medical costs in workers’ comp is to look at alternatives that as of yet have not been tried because of lack of will, or a belief that alternatives are not realistic, or because we still cling to the notion that our healthcare system is the best in the world. and no one else comes close.

As Puck said, “Lord, what fools these mortals be.”