Healthcare Business News

Medical costs spike: Milliman

By Jennifer Lubell
Posted: May 11, 2010 - 3:15 pm ET

Total healthcare costs for a typical family of four increased $1,303 or 7.8% over the past year, according to the Milliman Medical Index, the highest total dollar increase in the history of the actuarial firm's annual study.

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Total medical spending for the average American family reached $18,074 in 2010, compared with $16,771 in 2009, according to the study, which tracks the changes in average yearly healthcare costs when a family of four is covered by an employer-sponsored preferred provider organization.

Inpatient and outpatient facility services combined represented 48% of the total annual medical costs, up 1% from last year. From 2009 to 2010, the annual rate of increase in total inpatient hospital expenses for the average family of four grew from 7.7% to 9.8%, whereas the outpatient rate of increase grew from 10.2% to 11.6%, “the area of highest growth for the second year in a row,” according to the study.

The annual rate of increase for physician costs by comparison declined from 6% to 5.2% over the past year.

The findings also track cost differences among 14 metropolitan areas. Among these 14 areas, three cities—Miami, New York and Chicago—were cited as the most expensive places to receive healthcare, each exceeding the $20,000 per-family mark. Phoenix is the least-expensive city in this study with a per-family cost of $16,071.

The survey predicted that healthcare reform would not have a material effect on large-group benefit costs in 2010. “The cost of group insurance continues to increase at a historically consistent pace, even with reform now the law of the land. While there will be short-term cost implications, especially for particular employees and certain employers, this year reflects a continuation of the prevailing cost trends,” said study co-author Lorraine Mayne, Milliman principal and consulting actuary.

Milliman is a Seattle-based actuarial and consulting firm. Its annual medical index is based on Milliman's analysis of historical claim data and understanding of trends in utilization and cost.



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