According to the 2023 Milliman Medical Index, health care costs for a typical family of four reached $31,065 and costs for an individual reached $7,221, compared to $29,424 and $6,813 in 2022, respectively. Several factors contribute to this increase including inflation, supply chain issues, provider labor shortages and increased job mobility.
Health care costs increased 5.6% this year, returning to pre-Covid year-to-year increase levels. While health care inflation generally mimics overall inflation, it typically lags behind about six to twelve months due to the timing of health care contract negotiations.
Employers recognize the value of investing in benefits. The report shows that employers are covering about 60% of the cost increase this year and that employee costs will rise 4.4% while employer costs will increase 7.2%, mostly because employers are looking to limit employee contribution increases. For individuals, out of the $7,221 total annual costs, employers are expected to pay about $4,241 and the employee is expected to pay $2,980 ($1,847 in payroll deductions and $1,133 in out-of-pocket costs).
Several factors impact health care costs and add to the challenge in estimating health care trends: supply chain issues, provider labor shortages, remote and hybrid work are all likely to have an impact on health care costs. Employee job transitions can lead to disruption in health care coverage and changes in utilization while supply chain issues disrupt the availability of materials for a variety of medical services.
Impact of “Transparency in Coverage” rules: The final rules, which required hospitals and payers to post data on health care costs, have the potential to have a huge downward impact on health care costs, if organizations are able to effectively navigate the enormous amount of data. If employers use this information and can more clearly define prices and quality for employees, we may see high-deductible health plans work as intended. The sheer amount of data this requires means it will take time to see its impact, but it has the potential to significantly affect overall health care cost trends.
Join us for “The Fundamentals of U.S. Health Care” our three-day, instructor-led, virtual course, where we will dive into the issue of rising health care costs and provide attendees with the background information necessary to better navigate the complex health care system and provide high-quality benefits to employees.
