Healthcare costs for a typical American family in 2016 surpassed $25,000 for the first time, according to new data out this week, spurred by rising prescription drug costs and a reduction in employer contributions.

The $25,826 in healthcare costs for a typical family of four covered by an employer-sponsored preferred provider plan is $1,155 higher than last year, and triple what it cost in 2001, according to the annual Milliman Medical Index analysis.

The employer portion is still the larger component — the employer pays an average of $14,793 of the total cost, while the employee — through payroll deductions and cost sharing at the time of service — pays $11,033.

Hitting the $25,000 threshold is a “significant and somewhat unsettling milestone,” says Milliman Medical Index co-author Chris Girod.

Healthcare costs remain a constant burden for both employers and employees. Poll after poll shows that managing health costs are one of employers’ biggest concerns.

Despite that, the MMI report says, family healthcare costs will increase 4.7% this year — the lowest rate of annual growth in the 15 years of the study.

Prescription drugs make up 17% of the average family’s healthcare cost, an average of $4,270 annually, according to the data. And, the average employer contribution to healthcare has decreased from 61% in 2001 to 57% in 2016.

The findings are important for employers and may impact how they deal with healthcare costs, says Sue Hart, consulting actuary in Milliman’s Dallas office and one of the study’s authors.

“With employers footing the majority (57%) of these costs, this means they will need to continue to explore solutions to control future growth,” Hart says. “This needs to go beyond cost-shifting to the employees, as affordability is a key issue for families as well.”

Employers have increasingly shifted costs on to employees, and deductibles have soared in the past decade, according to Kaiser Family Foundation and Health Research & Educational Trust.

“This year’s MMI reflects a number of initiatives — including solutions focused on consumers, delivery systems and technology — that have potential to continue to drive trends down,” Hart says. “A combination of these initiatives is likely needed to significantly impact the direction of future healthcare costs.”

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