Out of pocket

Two new articles use the Milliman Medical Index to look at the difficulty many Americans face paying their share of healthcare costs. This is from the St. Petersburg Times:

Carol Schaub of Madeira Beach is thinking about dropping her health insurance because she can’t afford the $500 monthly premium. Bob Shah of Seminole increased the deductible on his family’s plan to $5,000 to keep his rates affordable. Janet and David Quinn of Brooksville have put off needed treatments and medications for financial reasons…

Average out-of-pocket health care costs for a family of four with insurance have ballooned from $3,634 in 2002 to $8,008 this year.

And that’s for families who get coverage from their employers. If you’re paying COBRA premiums like Schaub, or buying on the individual market like the Shahs, the costs are often much higher.

There’s also this article, from American Medical News:

The average annual cost of health care for a family of four covered by a PPO plan grew 7.3%, from $18,074 in 2010 to $19,393 in 2011, according to the 2011 Milliman Medical Index released May 11. The percentage change was slightly less than in previous years, and the total includes the employers’ share of costs.

But patients are feeling more of the cost sting: The employee’s share of that total grew at a faster rate than the employer’s share. Employee out-of-pocket expenses grew 9.2% to $3,280, and the payroll deduction for insurance and related health expenses increased 9.3% to $4,728. The amount of money paid by an employer grew 6%, to $11,385.

“As has been the case in four of the last five years, employees are paying a larger share of the cost increase than their employers,” said Scott Weltz, consulting actuary at the medical index.

For the long-term perspective on how costs are increasing for families, check out this exhibit, which shows how employers and employees have split the rising cost of healthcare over the last several years:

2 thoughts on “Out of pocket

  1. RE: The first quote – Insurance premiums vary state-to-state, but in California, the individual market is *much* more affordable than the group market.

  2. Nick,

    It’s true that insurance premiums in California’s individual market are generally more affordable than group premiums, though we thought it might be helpful to clarify why that is. For PPO plans, the individual policies tend to have very high deductibles. So the lower premiums are reflected in less generous benefits. That said, there can be variation in either direction. In California, individual products must be offered at the same price for males and females. The small group market is priced based on the demographics of the group. So an individual female is probably priced lower than a small group of females. Additionally, individual policies are subject to more underwriting, so healthy individuals could benefit by getting more favorable rates than small groups, which don’t have the same robust underwriting.

    There is a different dynamic with HMOs in California. HMOs have similar rates for small group and individual policies.

    It really all comes down to benefit design.


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