Family healthcare costs rise significantly in 2010
The average total 2010 medical spending for a typical family of four reached $18,074, an increase of $1,303 over last year, according to actuarial firm Milliman, Inc. The increase is the highest in the history of the study.
The Milliman Medical Index (MMI) tracks the changes in average yearly healthcare costs for a family of four covered by an employer-sponsored preferred provider organization (PPO).
For its study, Milliman used the number, type and cost of healthcare services used, along with the amounts that the employee 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 use and cost. 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 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, 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, a Milliman principal and consulting actuary.
She said the cost of group insurance continues to increase at a historically consistent pace. There may be short-term cost implications from healthcare reform, especially for particular employees and certain employers, but "this year reflects a continuation of the prevailing cost trends."
Co-author Ron Cornwell, also a Milliman principal and consulting actuary, said most of the decisions that determined 2010 plan costs were made in an environment of uncertainty as employers awaited the conclusion of the reform debate.
"Many of this year's cost drivers, including the share of employer and employee cost increases, reflect historical trends," he said.
Meanwhile, a study released in May by The Commonwealth Fund and the Center for American Progress predict a positive impact from healthcare reform.
It showed reform could likely reduce annual growth in healthcare spending by $590 billion over the next decade, and annual family premiums are expected to drop $2,000.
"By changing the way we pay for and deliver care to reward high performance, we will begin to bend the healthcare cost curve, and all Americans will see real economic benefits," said Karen Davis, president of The Commonwealth Fund.
The study also predicts a reduction in the deficit of up to $400 billion over 10 years, and Medicare savings of $524 billion.
