Costs Rising

The Milliman Medical Index is a tool used to measure the average spending (employer and employee) for families that are covered by an employer-sponsored PPO.

According the most recent index reported, the average annual cost of delivering healthcare to a family of four grew 9.6 percent this year to $13,382. Based on current data and tracking mechanisms, they are estimating the cost for an average family of four to rise by double digits up to 17 percent or about $2210 next year.

This again places a huge burden on businesses to either increase their costs to cover for the rise or pass the cost onto the families. These numbers are continually higher than inflationary levels and companies cannot continue to “eat” the cost year after year.

Many employers are now offering consumer-driven health plans (CDHPs) as an alternative or as a separate choice. CDHP’s consist of a variety of plans like MSA’s, HSA’s, deferred compensation, etc. According to Aon Consulting and the International Society of Certified Employee Benefit Specialists, their most recent survey found that 28 percent currently offer a CDHP—up from 22 percent last year and 40 percent of the remaining respondents plan to offer a CDHP.

There were about 30 percent of companies still undecided about if or when to offer such plans but about half thought they would do so by 2007.

This means that there are about 5 million people (nearly 3 percent of the 177 million Americans with private health coverage) already participating in some form of CDHPs. Trends like these could truly change healthcare payment mechanisms but at this rate, it will take 20 plus years to see a significant impact.