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Health Care

Medical Costs Went Up 5 Percent Last Year, and That's Good News

Medical costs for a typical American family with employer health benefits increased 5 percent in the past year—the smallest jump since Milliman started tracking it more than a decade ago.

The average, $23,215 for a family of four, includes what the workers and employees contribute to insurance premiums, as well as what workers pay out of pocket for care. (It doesn’t count administrative costs or insurers’ profit.) Milliman’s figures are consistent with other research, such as the Kaiser Family Foundation’s annual employer benefits survey.

The good news is that the cost increases are getting smaller for the 171 million Americans—more than half the country—that get health insurance through their employers. The bad news is that health-care costs are still increasing, and faster than the cost of everything else. That means they are eating up an ever bigger chunk of workers’ salaries and company budgets.

The relatively modest increase is cold comfort for families at the edge. If you were struggling to pay for care last year, and medical costs increased at a slower pace than in previous years…you’re still struggling.

Overall health spending in the U.S., which includes public programs such as Medicare and Medicaid, has been increasing at 4 percent annually for four years running, a historically low pace.

That tends to happen in the years after millions of people lose their jobs and their insurance. Economists are still uncertain whether the slowdown is just an extended hangover from the Great Recession—or whether all the efforts by employers, government, and the health-care industry itself to tame runaway medical bills are actually paying off.

Tozzi is a reporter for Bloomberg Businessweek in New York.

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