In 2018, healthcare costs averaged $28,166 for a family of four on an employer-sponsored PPO, according to the 2018-Milliman-Medical-Index. That’s a $1,222 increase over last year. The MMI has been increasing about $100 per month for more than 10 years. Employees are facing the brunt of growing health care costs, with their expenses increasing 5.9% while employer’s expenses are only increasing 3.5%.
On a positive note, the annual rate of increase is nearly the lowest in 18 years at 4.5%. That compares to 7.4% in 2001. These factors are credited with reducing cost trends:
- Value-based reimbursement
- Risk sharing arrangements
- Accountable care organizations.
- Financial incentives: Strong financial incentives are still rare in many regions where fee-for-service medicine prevails.
- More sophisticated provider contracting by employers, insurers, and TPAs: On the flipside, provider consolidation keeps trends from being lower.
Prescription drug trends are down for the third consecutive year at 6%. Annual increases in prescription drug expenditures have declined to levels last seen just before the great hepatitis C treatment spike of 2015. Several factors have reduced cost trends for prescription drugs, including the movement to generics, and a reduced use of some high-cost drugs. However, drug costs are a major reason that total health care expenditure growth is not likely to come down further, particularly for the specialty pipeline and emerging gene therapies.
As health care costs continue to rise, your LISI Sales Team can help you find creative and affordable solutions for your groups from a range of carriers, plan types and networks. They’ll advise you whether your groups could benefit from a High Deductible Health Plan paired with an HSA or FSA. And they’ll let you know about opportunities to mitigate employees’ higher health care costs with ancillary benefits through CoPower.
Contact your LISI Regional Sales Manager to find out more.