Health — 16 May 2012


Everyone knows that the cost of healthcare is rising, but most American families who receive health insurance through an employer have no idea just how expensive it is.

The average cost for a typical American family of four receiving healthcare through an employer-sponsored preferred provider organization (PPO) is $20,728, according to a study published by Milliman, Inc., a Seattle-based consulting and actuarial firm.

“Some families may be surprised to hear their total average healthcare costs are exceeding $20,000 this year,” said Scott Weltz, an actuary in Milliman’s Milwaukee office. “Most people who receive health insurance through their employer are insulated from the true costs associated with the care they receive.”

Although healthcare costs are 6.9% higher in 2012 than they were last year, it’s the lowest annual percentage increase in the ten years of data studied by Milliman. This year’s $1,335 increase pushed the average healthcare cost for a family of four above $20,000 for the first time.

“The average rate of increase this year dips below 7% for the first time since we began analyzing these costs, but the total dollar increase is still the highest we have seen,” said Lorraine Mayne, a principal and actuary for Milliman in Salt Lake City. “This helps illustrate the challenge of controlling healthcare costs. When the total cost is already so high, even a slower rate of growth has a serious impact on family budgets.”

Milliman also analyzed how employers and employees split the cost of healthcare. In 2012, a typical employer will contribute $12,144 of the $20,728 total; while employees will pay the remaining $8,584 through out-of-pocket expenses and payroll deductions. Percentage wise, employers will pick up about 59% of the costs, while employees will pay 41%.

Fourteen cities were included in the Milliman study, and nine of the 14 exceeded the national average of $20,728. Only three cities — Phoenix, Atlanta, and Seattle– had healthcare costs less than $20,000.

Here’s the breakdown of five of the most and least expensive cities, according to the report:

Most Expensive Cities for Healthcare


Healthcare Cost



New York City









Least Expensive Cities for Healthcare


Healthcare Cost












The Milliman report noted that the Affordable Care Act, widely known as Obamacare, has so far had only a limited impact on healthcare costs because most of the Act’s provisions haven’t been implemented. According to a recent review by the Congressional Budget Office, full implementation of Obamacare will lead to a small reduction in the number of people receiving employment-based health insurance.


About Author

Elizabeth Magill

Elizabeth is a professional writer who holds an MBA. Liz focuses her writing on health news, medical conditions, healthy living, small business, career and work, and financial news. Her clients include The Motley Fool,, Healthline, HealthNews, Intuit Small Business Blog and many others. She’s author of multimedia App and Vook Conduct a Job Interview: The Video Guide.

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