Health Care Costs on the Rise in Los Angeles, Across the Country
The average annual health care cost for a Los Angeles household has increased significantly in recent years, according to a new report by consulting firm Milliman, Payers & Providers reports (Payers & Providers, 5/12).
The firm developed the Milliman Medical Index by examining average health care use, benefits and health care provider fees in all U.S. states. The health care cost estimates account for health insurance premiums and employee-paid costs, such as copayments and deductibles (AP/Washington Post, 5/11).
According to the index, the average annual health care cost for a Los Angeles family of four is $19,391 this year. The amount has increased by nearly 43% since 2006, when average annual health care costs for a Los Angeles family of four was $13,537.
However, this year's average costÂ represents onlyÂ a 6.7% increase over last year's average cost of $18,098, making this year's increase one of the lowest in years.
Chris Girod, principal at Milliman, noted that health care costs likely are higher in Northern California because the region is dominated by several large hospital chains that often charge high rates for procedures.
According to the index, the nationwide average annual health care cost for a family of four is $19,393 this year, just slightly above Los Angeles' average cost of $19,391 (Payers & Providers, 5/12).
The nationwide cost has more than doubled since 2002, when the average annual health care cost for a family of four was $9,235. However, this year's costÂ represents onlyÂ a 7.3% increase over 2010, making it the lowest annual increase in more than 10 years (Bouchard, Healthcare Finance News, 5/11).
In addition to Los Angeles, the Milliman Medical Index examined costs in 13 other cities. Average health care costs for a family of four ranged from $17,336 in Phoenix to $23,362 in Miami.
Lorraine Mayne, principal and chief actuary at Milliman, said geographic cost differences could stem from various factors, such as industry competition, patterns in health care use and differences in how health care providers practice medicine (Tocknell, HealthLeaders Media, 5/12).
Details of the Costs
The index broke down the average nationwide health care cost by employer and worker contributions. Of the $19,393 nationwide average, the index found that:
- Employers contribute an average of $11,385; and
- Workers contribute an average of $8,008, which includes about $4,728 for health care coverage and $3,280 on out-of-pocket costs.
The index also broke down the average nationwide health care costs by components of care. Of the $19,393 nationwide average, the index found that:
- $6,329 went to physician costs;
- $6,068 went to hospital inpatient care;
- $3,404 went to outpatient care;
- $2,847 went to pharmacy services; and
- $745 went to other health services (Payers & Providers, 5/12).