Milliman, the large health care actuarial firm, issues a yearly report on what medical costs are for a typical family of four covered by employer-sponsored health insurance in the form of a PPO plan. Milliman bases its analyses on a 65 million person claims database. The 2019 expectations have been revealed. (Milliman Report) Last year Milliman estimated that costs rose 2.9% from 2017 to 2018 and this year they believe the increase was 3.8% from 2018 to 2019, or $28,386. To get a sense of that, it is over $2300 a month or $525 a week. Think about that. For a single person covered under such a plan, the costs in 2019 are $6348, up from $6116 in 2018 and $5920 in 2017. Milliman uses five categories of care, inpatient facility care, outpatient facility care, physician and professional services in any setting, drug, and other, which accounts for only 2% of spending. For the average person, inpatient in 2019 is projected to be 19% of costs; outpatient facility, 29%; professional services 30%; and drugs 20%. Over several years, the general trend has been for the proportion represented by physician and professional services to shrink and that accounted for by hospital and drugs to increase. In 2018, the trend may be changing, as physician spending rose about 3.2% and for 2019 it is projected to be 4.6%. Consistent with other research, Milliman shows growth rates for pharmacy slowing, having risen 4.6% from 2017 to 2018 and by 2.1% from 2018 to 2019.
Drug spending gets some detailed review because of the specialized nature of cost-sharing for that category. Plans often now use co-insurance and even drug-specific deductibles, so consumers feel the weight of that spending more. The potential for passing rebates, which can be very significant, to the employee as opposed to the employer is gaining popularity. As Milliman’s examples show, this can substantially reduce employee out-of-pocket cost, but raises the cost to employers, which probably means that employee premium contributions will rise, so either way, the worker is going to pay. Overall, in 2019 Milliman estimates that employers will pay 59% of the cost of the average person’s health care, or around $3773; while the employee pays $1541 in premium contributions and $1034 in out-of-pocket spending. And contrary to prevailing public opinion, the employee share is growing much slower than the employer one, probably due to low unemployment. Milliman estimates that in 2018 the employee share rose less than 1% while the employer share grew 5.1% and in 2019 they are estimating a reversal, with employee costs up 4% and employer ones increasing 3.6%. So probably the source of worker financial anxiety is more the absolute level of health care costs, not the rate of increase. And it is apparent what a significant burden health care costs are for the average company as well.