Average annual medical costs increased by 7.6%, or $1,109, for the typical American family of four from 2007 to 2008, according to the fourth annual Milliman Medical Index. The rate of increase was lower than the previous year8.4%and also represented the lowest rate of the past five years, according to the index.
Temporary slowing of cost increases in certain areas has led to this modest rise in the index, according to the report. Inpatient hospital costs for example increased by 7.1% compared with the previous years rate of increase of 9%. Milliman actuaries attributed this decrease to a number of factors, such as more surgeries moving into the ambulatory setting, and possibly better management of chronic conditions, which would reduce the number of inpatient stays.
Although overall rates slowed, pharmacy costs, which include prescription drugs, increased by 10.6% in 2008 after two years of decreases. However, this cost category represented only 15% of spending in 2008, compared with inpatient (30%), outpatient (16%) and physician spending (35%), according to the actuaries. Employees share of spending on healthcare services also continues to rise, increasing by 10.1% from 2007 to 2008. Milliman is a Seattle-based global consulting and actuarial firm. -- by Jennifer Lubell