Family healthcare costs rise significantly in 2010
The average total 2010 medical spending for a "typical American family of four" reached $18,074, an increase of $1,303 over last year, according to new research by actuarial firm Milliman, Inc. The total-dollar increase is the highest in the history of this study.
The Milliman Medical Index (MMI) tracks the changes in average yearly healthcare costs when the family of four is covered by an employer-sponsored preferred provider organization (PPO).
For its study, Milliman used the number, type, and cost of healthcare services a family of four used, along with the amounts that the employee's health plan pays medical providers for these services.
The MMI is based on Milliman's analysis of historical claim data and understanding of trends in utilization and cost. Milliman researchers said they compared data on a family's medical services, ages, geographic area, health status, and other factors.
According to this year's MMI, the difference between the least-expensive and most-expensive cities in the study was 37 percent. Among the 14 metropolitan areas Milliman annually studies, three cities--Miami, New York, and Chicago--now exceed $20,000 per family. Phoenix is the least-expensive city in this year's study with a per-family cost of $16,071, the researchers said.
"This year's MMI offers an interesting example of that old axiom, 'the more things change, the more they stay the same,'" said study co-author Lorraine Mayne, Milliman principal and consulting actuary.
"The cost of group insurance continues to increase at a historically-consistent pace, even with reform now the law of the land," she said. "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."
According to MMI co-author Ron Cornwell, Milliman principal and consulting actuary, most employers have held off making significant changes while they awaited detail on healthcare reform.
"Most of the decisions that determine 2010 plan costs were made in an environment of great uncertainty as employers awaited the conclusion of the reform debate," Cornwell said. "Many of this year's cost drivers, including the share of employer and employee cost increases, reflect historical trends."
Chris Girod, MMI co-author and Milliman principal and consulting actuary said the depressed economy has played a role in elevating healthcare costs
"When employees are laid off, there are also cost ramifications for the remaining employees," he said.
