NCPA - National Center for Policy Analysis


July 5, 2006

Americans should expect to pay more for medical costs whether they are employed or retired, according to two new studies.  The reports, by Milliman Inc. and Watson Wyatt Worldwide, show that health-care costs are still rising at a fast pace -- despite slowing from double-digit rates in recent years -- and that businesses expect to curtail or limit retiree medical benefits.

The average annual medical cost for a family of four participating in a preferred provider organization, or PPO, program is up 9.6 percent from 2005 to $13,382 in 2006, according to Milliman, a consulting and actuarial firm. 

  • The Milliman Medical Index is based on analysis of claim costs for millions of members in a variety of areas of the country. Researchers found that employers are projected to pay about $8,362, or 62 percent, of the total medical cost for a family of four. The employee pays about $5,020: $2,810 in payroll deductions and $2,210 in cost sharing.
  • The researchers also looked at the cost of health care in several major cities over the last year. New York City was the most expensive at $15,255, and Dallas the least expensive at $12,980.

A separate study by Watson Wyatt, a global management-consulting firm, found that businesses expect to further restrict or eliminate retiree medical plans.  The survey of 164 companies found that 14 percent plan to eliminate the benefit for future retirees over age 65, and 6 percent plan to eliminate it for their current retirees over age 65.

Source: Jilian Mincer, "Health-Care Costs To Hit Workers, Retirees Harder," Wall Street Journal, July 5, 2006.

For text (subscription required):


Browse more articles on Health Issues