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health care costs cost more than groceries, year’s worth of gas

May 24, 2013

in health care,high-deductible health plans,research/reports

the 2013 milliman medical index minces no words about the crushing financial burden facing the average american family. the burden doesn’t come from college costs, retirement, or the purchasing of daily goods, though those are all present too. the burden comes from the share of health care costs this family shoulders.

health care costs exceed grocery bill

according to this year’s index, the average family of four’s annual health care cost burden is $22,030. the total cost, which includes payroll deductions and out-of-pocket expenses like copays, exceeds the cost of groceries. since payroll deductions can be out of sight, out of mind, milliman also looked at comparisons for out-of-pocket expenses only. these exceed the cost of a year’s worth of gas. college, food, gas—which would you do without? it’s obvious the average family has very little wiggle room, which helps explain why employees put off needed health care and aren’t saving enough for retirement.

college or health care?  

no relief in sight

while there’s been a slowdown in health care costs, families are unlikely to see any financial relief as companies limit their own financial burden by shifting more of it onto employees. employees today contribute 42% more for health care than they did five years ago, according to the 18th annual towers watson/national business group on health survey, compared to a 32% increase for employers.

a primary way of accomplishing this cost-shifting is by offering a high-deductible health plan or only high-deductible health plans. in the past few years, more employers have included these plans and a percentage have shifted to offering them solely. the number of large companies expected to go full-replacement HDHP is only expected to grow. according to the mercer national survey of employer-sponsored health plans, 18% of respondents plan to go full replacement in the next five years, up from 11% in 2011.

employers will also rely on and test other cost-containment strategies. wellness efforts have a stronger foothold each year, and companies are beginning to test more stick than carrot to encourage healthier behaviors. companies are also looking at increasing the cost of coverage for dependents, implementing spousal surcharges and defined contribution strategies, and making changes to retiree benefits, among other strategies.

communication and support tools critical

these changes do little to improve the lot of the average family today, particularly as they continue to face flat-lined wages. companies struggling to manage their own costs while doing right by employees can invest in communication, technology, and support tools to help employees evaluate and make smart health care decisions with their already stretched-too-tight dollar.

find the 2013 milliman medical index here.

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