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Health care spending to top $20,000 per family in 2012

By Maryalene LaPonsie on June 13th, 2012

It will cost $20,728 to provide health care for the typical American family in 2012. This figure, calculated by the Milliman Medical Index, is based upon a family of four enrolled in employer-sponsored PPO health insurance plans.

According to Milliman, 2012 marks the first time annual health care expenses are expected to exceed $20,000. However, the annual cost represents a 6.9 percent increase from 2011, the first time the annual growth rate has dipped below 7 percent since Milliman began tracking prices 12 years ago.

Employers, employees share costs

The Milliman Medical Index calculates the cost of employer-sponsored health insurance plans, commonly known as group insurance. Within these medical insurance groups, employers and employees generally share costs.

In 2012, employers are expected to foot the majority of the health insurance bill for families. Employers will pay, on average, $12,144 this year to subsidize premiums for their employees and their families.

Employees can expect to pay $8,584 out of pocket this year. Milliman estimates employee costs will equal $5,114 in payroll deductions for premiums and other expenses as well as $3,470 for deductibles, co-insurance and co-payments.

"Some families may be surprised to hear their total average health care costs are exceeding $20,000 this year," said Scott Weltz, consulting actuary with the Milwaukee office of Milliman, in a press statement. "While everyone knows the cost of health care is increasing, most people who receive health insurance through their employer are insulated from the true costs associated with the care they receive."

Cost increases vary by type of care and region

While the overall increase in health care costs is 6.9 percent, the Milliman Medical Index also breaks down increases by category. According to the index, the price of health care services will grow by the following rates of increase in 2012:

  • Outpatient care: 8.6 percent
  • Inpatient care: 7.6 percent
  • Pharmacy: 7.3 percent
  • Physician: 5 percent

Although outpatient care will see the greatest percentage growth compared to 2011, it is not the most expensive aspect of family health care. In terms of dollars, the most money is spent on physician and inpatient care, which have annual costs of $6,647 and $6,531, respectively.

The index also compared the price of health care in 14 cities. Of these, Miami had the highest annual cost of care, with family health expenses expected to be $24,965 in 2012. New York City came in a close second at $24,545.

Three cities - Phoenix, Atlanta and Seattle - had annual family health care costs below $20,000. Phoenix was the least expensive city included in the index, with an average 2012 cost of $18,365.

Maryalene LaPonsie
Maryalene LaPonsie has been writing professionally for more than a decade on topics including education, insurance and personal finance. She holds a Bachelor's Degree in Political Science from Western Michigan University.

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