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Life Health > Health Insurance > Life Insurance Strategies

Milliman: Health Costs Rise 7.3%

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The cost of health care for a typical family of four has increased 7.3% this year, to $19,393.

Milliman Inc., Seattle, has published that figure in its 2011 Milliman Medical Index report, which is based on an analysis of the underlying cost of health care for a family covered by a typical preferred provider organization plan.

Milliman looks at factors such as the cost of inpatient hospitalization, outpatient care, professional services and pharmacy services. The analysis does not include the cost of long term care, and it does not include insurance plan administration costs.

The rate of increase is down from 7.8% in 2010, but employees’ share of total costs has increased to about 40%, from about 37% in 2005, Milliman says.

The cost of outpatient care showed the fastest rate of growth. Average outpatient costs for families in typical PPO plans are 10% higher than they were a year ago, Milliman says.

Milliman also looked at costs in 14 major markets.

In 6 of the 14 markets, typical health care costs for a family of four already exceed $20,000, Milliman says.

Phoenix had the cheapest care costs; there, the annual cost of a plan for four is about $17,300.

“These cost differences result from variation in local practice patterns and from differing costs for healthcare goods and services,” Chris Girod, a Milliman consulting actuary, says in a statement about the Milliman findings.

Milliman analysts note that the “Cadillac plan” provision in the Patient Protection and Affordable Care Act (PPACA) is supposed to start imposing a 40% excise tax on high-cost plans in 2018. The threshold for family coverage would be $27,500 — a price that is not far from the current average cost of health care in some cities, the firm says.


CORRECTION An earlier version of this article was unclear about the type of costs that Milliman analyzed. Milliman analyzed the underlying cost of health care.

Other Milliman health cost data coverage from National Underwriter Life & Health:


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