You'll be shocked at how much health insurance costs for a family of four

Guy Boulton | USA TODAY

Show Caption Hide Caption Association health plans could make health care affordable for small businesses Former Health and Human Services secretary Tom Price explains how association health plans can provide small businesses the opportunity to work together to negotiate better health care for their employees.

Health insurance costs have been increasing at the lowest rate in the past two decades.

The result?

The total costs for a typical family of four insured by the most common health plan offered by employers will average $28,166 this year, according to the annual Milliman Medical Index.

That's up from 2010, when the cost crossed $20,000. Just two years ago, it topped $25,000.

The estimate includes the average cost of health insurance paid by employers and employees, as well as deductibles and out-of-pocket expenses.

Despite the significant expenses for many households and employers, the slower rate of growth is good news, said Scott Weltz, a principal and consulting actuary in the Brookfield office of Milliman.

“But every month, a family of four’s health care costs are going up $100 a month,” Weltz said.

The costs have been rising by that amount — on average — for more than a decade.

More: Starbucks debuts Serious Strawberry Frappuccino

More: Parents magazine, Edmunds pick top family vehicles

More: Social Security: Will I not get spousal benefits because of state retirement pension?

“The Milliman Medical Index is great because it gives you a snapshot of what people covered by employer-sponsored insurance get and what that coverage costs,” said Melinda Beeuwkes Buntin, a professor and chair of the Department of Health Policy at Vanderbilt University Medical Center.

The index also estimates deductibles and other out-of-pocket expenses.

The largest share of the total cost is the health insurance premium paid by employers.

Last year, the premium for the most popular health plan offered by employers — what is known as a preferred provider organization — for family coverage was $19,481, according to the annual survey done by the Kaiser Family Foundation and the Health Research & Educational Trust.

Employers paid $13,430 and employees paid $6,050 of the premium on average.

Most people give little thought to their employer’s share of the cost.

“They only see the portion of these costs that gets listed on their pay stubs,” Buntin said.

Yet the cost of providing health benefits is part of their total compensation — and, to an employer, no different than wages, payroll taxes and other costs of employing someone.

“That gets lost on most people,” Buntin said. “It’s one of the things that I work on when I teach economics to students.”

One of the reasons that workers have seen smaller raises is a larger share of their total compensation goes toward providing health benefits.

For employers, the cost of providing health benefits is a dilemma. They want to control costs. But they also want to offer attractive benefits.

“It’s push-pull,” Weltz of Milliman said.

The trend of smaller increases — albeit off of a much higher base — is encouraging.

This year, the Milliman Medical Index increased 4.5%. That was only slightly higher than the 4.3% increase last year, the lowest increase in the 18 years that Milliman has compiled the index.

“We are moving in the right direction relative to where we were,” Weltz said.

But new ways of paying for health care — such as those that enable health systems and physicians to share in the savings when they provide quality care at a lower cost — are slowly taking hold.

And for the third consecutive year, prescription drug costs have increased at a slower rate.

The incentives that reward health systems and physicians for providing more care — even when it may not improve a patient’s health — still prevail.

But Weltz said that there has been progress in the past five years.

Susan Giaimo, an adjunct professor of political science and biomedical science at Marquette University, agreed.

“This seems to be a major change going on in the American health care system,” she said.

When will the Milliman Medical Index top $30,000?

“Give it a few years,” Weltz said.