The Cost of Healthcare (Not Necessarily the Cost of Health Insurance)

This year, there was an increase in cost trend for inpatient and outpatient facilities, and a decrease in cost trend for physician, pharmacy and other services.

o Inpatient and outpatient facility services combined represent 48% of total annual medical costs vs. 47% in 2009.

o The largest dollar increase this year was for inpatient facility care, which increased by $498.

o The 2009 to 2010 hospital inpatient annual rate of increase grew from 7.7% to 9.8%; most of the inpatient annual rate of increase is driven by "average unit costs."

o Although physician costs are the largest component of overall health care costs, their 2010 annual rate of increase is lower than other health care cost components.

There is large variation in health care costs across geographic regions. Costs vary from low to high by more than 35%, with the lower-cost areas generally being in the West and across some parts of the South.

At $10,744, the average employer's share of the cost nationwide for the typical family of four now surpasses $10,000 for the first time.

With reform now in place, some short-term reforms may shift costs further from employees to employers.

Despite passage of federal health reform, the underlying drivers of increasing health care costs are not expected to immediately change.