Family health-care costs breach $20,000

Health costs are among the many reasons family finances are under strain. For the first time, the total bill for the typical family of four with an employer-sponsored health-care plan (a preferred provider plan with co-pays and deductibles) breached $20,000 in 2012.

Specifically, the average cost for the family of four in 2012 is $20,728, a hike of $1,335 or 6.9 percent from 2011, according to the Milliman Medical Index.

The rate of increase is down over the past 2 years, but the dollar amount keeps climbing higher. (The figures are only for people who receive health care via their employers. The health insurance market for people who have to get it on their own is much worse.) 

Employers still shoulder the main cost burden with health care. But the employees' share of the bill -- out of pocket costs plus payroll deductions -- is on the increase at $8,584 for 2012.  

There is a great deal of uncertainty surrounding health care. First of all, none of these figures includes the impact of the Obama Administration's signature health-care legislation, the Patient Protection and Affordable Care Act. Secondly, while the Supreme Court has heard oral arguments on a major legal challenge to the Affordable Care Act, the Court hasn't yet issued a decision.  

Nevertheless, numbers such as these emphasize that how we pay for health care will continue to be a major public policy issue. Reform is critical. 

The cost burden weighs heavily on ordinary family finances, and the employer price tag for offering the benefit keeps moving higher. This is before even considering the terrible health-care market for those without access to an employer-provided plan and the realization that at the core of the federal government's long-term budget deficit is spiraling health care costs. 

The bottom line: The status quo is simply unacceptable.

About the author

Chris Farrell is the economics editor of Marketplace Money.
Log in to post3 Comments

"The status quo is simply unacceptable."

What's unacceptable is that $17,258 of the $20,000 is fully tax deductible, by the employer. Meanwhile, a small business owner can't deduct health insurance costs. So in addition to paying $20K every year just to insure my family (plus thousands more in out-of-pocket costs), I'm also writing a check every year for about $8,000 -- and company's like WalMart and Halliburton are cashing that check and shunting it into CEO pay.

By subsidizing health care with about $200 billion every year, the government is just driving up health care costs. And small businesses and entrepreneurs end up paying the price.

If we get the 1% to actually pay their fair share of taxes, health care costs will drop for everyone.


As we watch the airlines and banks pummel us with business fees rather than list one price for a product, we see healthcare with fee for service. Both policies are meant to extract maximum gain for the business. Fees aren't taxed as heavily as fares, so businesses use this policy. If we want to reverse fee for service with healthcare, which is not making much progress with these health systems being developed, we simply need to tax the bad policy more heavily to change the profit model. That is, of course, not the only solution....healthcare costs are rising as waste and fraud increase for example, but our society is strengthened by strong corporate tax policy. Those pushing this free market/new economy mantra had better look towards Europe as citizens fight the powers-that-be trying to remake society in their 5% image. The people do not want it!

How does the $20,000 figure compare with the amount of health care services that an insured family is consuming? If the rate of consumption is rising in line with the cost of coverage, than that is not as bad as if the rate of coverage is rising much faster than the rate of consumption. So, that second bit of information is key.

With Generous Support From...