Employees with health insurance as part of their compensation package are paying more in total healthcare costs as well as paying a higher percentage of their costs in 2015.
A Milliman Medical Index (MMI) study says the total bill for healthcare for a typical American family of four with employer-based insurance will rise 6.3% to $24, 671 in 2015. That’s higher than last year’s all-time low 5.4% increase. Costs rose 7.3% in 2010 and 6.9% in 2011.
Employers will pay roughly $14, 200 of that amount while the employee will pay about $10, 400. Most of that increase is due to higher prescription drug prices, which rose 13.6% after a five-year period when drug prices rose only by 6.8%. “The rate at which prescription drug costs increased this year doubled over the average increase of the prior five years, ” said Scott Weltz, co-author of the MMI. “This was driven by a combination of factors, including the introduction of new specialty drugs, a continued increase in compound drugs, and price increases for both brand name and generic drugs.”
For the fifth consecutive year, employees have assumed an increasing percentage of the total cost of care, according to the report.
Healthcare Costs Outpacing CPI
“Healthcare costs for this family have doubled in the past decade, and tripled since we began tracking this information in 2001, ” said Sue Hart, co-author of the MMI. “As has been the case throughout the time we have studied costs for this family, the rate of increases far outpace the consumer price index (CPI). According to the U.S. Bureau of Labor Statistics, the CPI rose 0.2 in March 2015.
Including payroll deductions and out-of-pocket expenses, the total employee cost increased by about 43% from 2010 to 2015, while employer costs increased by 32%. Of the family’s $10, 400 costs, $6, 408 was paid through payroll deductions while $4, 065 in out-of-pocket expenses incurred at point of care.
The study also looked at the potential impact of Obamacare on costs.
Waiting for Cadillac Tax
While the impact of Obamacare has been small because the law’s focus was on individuals and small group markets, a so-called excise (Cadillac) tax on high-cost coverage will start in 2018 and will impact employees as employers are likely to scale back their offerings. “It is simply a matter of time” before generous plans are caught by the tax, noted the study.
Chris Girod, co-author of the MMI, said there is the prospect that a generous “gold” plan purchased by the typical family of four may trigger the “Cadillac tax.” Whether this typical family of four will actually be affected by the Cadillac tax will depend on if future trends exceed recent levels, he said.
The bottom line is that while more people are covered by health insurance, those with employer-based plans are likely going to pay an increasing amount of their own out-of-pocket costs.
