A report released this week by the global consulting and actuarial firm Milliman projects that employers will subsidize 59% of their employees’ healthcare costs in 2023 for individual and family coverage in employer-sponsored preferred-provider plans (PPO).
“Healthcare costs increased 5.6% this year and have increased by 4.8% annually since 2021, which is the sort of year-to-year increase we were seeing before the pandemic,” said Dave Liner, co-author of the Milliman Medical Index. “Call it a return to the status quo or a rebound from the pandemic—either way, family healthcare costs have resumed their persistent climb.”
The report said employee costs were 4.9% higher for individual coverage in 2022 compared to 2021 while employer costs increased 5.5% during the same period. In 2023, Milliman expects that gap to widen with employees contributing 4.4% more and employers 7.2% more.
In 2023, healthcare costs for the report’s hypothetical family of four will be $31,065. Costs for the average person will reach $7,221. The hypothetical family in the report was a male age 47, a female age 37, and two children ages 4 and 1.
Of the $7,221 coverage cost per individual, the employer contribution is $4,241 (59%); the employee payroll deduction contribution is $1,847 (26%); and the employee’s out-of-pocket costs through co-pays and deductibles is $1,133 (16%), the report said.
Doug Norris, a co-author of the Milliman Medical Index (MMI), said healthcare cost inflation tends to trail general inflation by about six to 12 months.
“While there have been some encouraging numbers on the general inflation front recently, we have a while before healthcare cost inflation catches up,” Norris said.
Macroeconomic forces are further contributing to rising healthcare costs, said Annie Man, co-author of the MMI. “It’s not just inflation—it’s the supply chain, labor shortages in healthcare, and a strong job market elsewhere.”
“Employers are shouldering almost 60% of this year’s cost increase, a sign that increased job mobility and the complexities of remote work are continuing to give employers a good reason to invest in benefits,” said Paul Houchens, co-author of the MMI.
To read the entire report, go here.
