Slideshow: Inside the Milliman Medical Index
May 17th, 2012
Geographic cost differences of more than $6,000
May 16th, 2012
By jeremy.engdahl-johnson
Healthcare costs differ from one region to the next. This year’s Milliman Medical Index (MMI) once again illustrates this variation by examining 14 cities. Miami is the most expensive city studied, at $24,965, while Phoenix is the least expensive, at $18,365.
Miami has been the most expensive city for several years, which caught the eye of the Miami Herald. Here is an excerpt:
The Miami area continues to have the highest healthcare costs in the country, according to the latest edition of the Milliman Medical Index…
The number include employer and employee costs, including some out-of-pocket deductibles and co-pays.
For years, the Miami region has ranked at or near the top of costs for Medicare, with seniors here often costing twice as much a year as those in places like Salt Lake City or Minneapolis-St. Paul, according to studies by Dartmouth doctors…
Dartmouth has long attributed the high costs in Miami to the area’s large numbers of specialists and an over-supply of hospital beds.
How do these costs vary across the 14 cities analyzed in the MMI? Here is an illustration:
Understanding healthcare costs and the Milliman Medical Index
May 16th, 2012
By jeremy.engdahl-johnson
This video explains healthcare cost drivers and provides perspective on the numbers from this year’s Milliman Medical Index.
What can $20,000 get you?
May 16th, 2012
By jeremy.engdahl-johnson
We blogged yesterday about the car comparison. The LA Times goes deeper:
Healthcare or a Hyundai?
The average cost of healthcare for a family of four this year has increased nearly 7% to $20,728 annually, according to a new study by benefits consultant Milliman, or similar to the cost of a mid-size sedan.
A quick online search turned up a 2012 Hyundai Elantra selling for $20,728 in Michigan sporting “volcanic” red paint. You can nab a 1956 Chevrolet Bel Air in Santa Maria for the same amount or for better mileage a 2010 Toyota Prius with just 36,000 miles in Miami.
The Milwaukee Journal Sentinel also offers a cost comparison:
There’s a good chance that health care costs for the typical family of four now are higher than their annual mortgage payment….
“When it comes down to it, that’s a lot of money for the typical family of four,” said Scott Weltz, a consulting actuary with the Milwaukee office of Milliman.
Clearly, $20,000 is a lot of money. Politico calls this a “dubious milestone.”
To see the full report, go here.
Small relief in percentage points
May 15th, 2012
By jeremy.engdahl-johnson
This year’s Milliman Medical Index (MMI) indicates that average healthcare costs for the typical American family of four increased by 6.9% in 2012—the lowest rate of increase in the history of this study.
The Huffington Post picks up on this—and offers broader context for what this increase means to American families.
Family health care costs grew by 6.9 percent between 2011 and 2012, slower than in previous years, but Milliman suggests there’s little comfort in that.
“The rate of increase is not as high as in the past but total dollar increase was still a record,” the report says. “The dollar amount of the increase overshadows any relief consumers might derive from the slowing percentage increase.” The health care reform law enacted by President Barack Obama in 2010 “has had only a limited effect” on health care costs, the report continues.
Spending on physician services will reach $6,647 and spending on hospital stays will rise to $6,531, making them the two biggest components of a typical family’s annual health care expenses, the report says.
For a summary of MMI coverage, visit our Storify page.
Healthcare or a new car?
May 15th, 2012
By jeremy.engdahl-johnson
The 2012 Milliman Medical Index equates the cost of healthcare for a typical American family of four with the cost of a basic mid-size sedan. Forbes picks up on this comparison:
You may not realize it, but the cost of your families’ healthcare for a single year is about the same as the cost of basic mid-size sedan. So says the 2012 Milliman Medical Index (MMI) that shows that for the first time, healthcare costs for American families exceed $20,000.
The MMI measures the total cost of healthcare for a typical family of four covered by a preferred provider plan (PPO). The 2012 MMI cost is $20,728, an increase of $1,335 or 6.9% over 2011. The rate of increase is not as high as in the past, but the total dollar increase was still a record.
And so does the Health Populi blog. Of course the only problem with this comparison is that most typical families don’t buy a new car every year, while healthcare needs are constant. Just look at the year-to-year costs:
2012 healthcare costs for American family exceed $20,000
May 15th, 2012
By jeremy.engdahl-johnson
Milliman today released the results of its 2012 Milliman Medical Index (MMI), which measures the average healthcare costs for a typical American family of four receiving healthcare through an employer-sponsored preferred provider organization (PPO) plan. The average cost of care for this typical family in 2012 is $20,728. While the 6.9% increase over 2011 is the lowest rate of increase in the 12 years tracked by the MMI, the $1,335 increase surpasses last year’s record of $1,319.
“The average rate of increase this year dips below 7% for the first time since we began analyzing these costs, but the total dollar increase is still the highest we have seen,” said Lorraine Mayne, principal and consulting actuary with the Salt Lake City office of Milliman. “This helps illustrate the challenge of controlling healthcare costs. When the total cost is already so high, even a slower rate of growth has a serious impact on family budgets.”
The MMI’s release date falls during an uncertain time for American healthcare, with the nation awaiting the outcome of the U.S. Supreme Court’s decision on the future of the Patient Protection and Affordable Care Act (PPACA). To date, the PPACA has had only a limited effect on healthcare costs for families covered by an employer-sponsored PPO plan; longer term, the implications may be more pronounced, and will depend on a number of dynamic and interrelated factors.
“We face a number of different potential scenarios depending on the future of reform,” said Chris Girod, principal and consulting actuary with the San Diego office of Milliman. “With this year’s MMI we have tried to map out what those different scenarios may mean for consumers, employers, care providers, and the government.”
As has been the case in prior years, this year’s analysis examines several key medical cost components:
- The MMI includes analysis of healthcare costs in 14 cities, thereby showcasing the role that geography plays in healthcare costs. This year, the average cost of care for the typical family in all but three of these cities exceeds $20,000. Of the 14 cities analyzed, Miami is the most expensive, at $24,965, while Phoenix is the least expensive, at $18,365.
- The MMI examines how employers and employees share the cost of healthcare. This year employers will on average contribute $12,144 of the $20,728 total while employees—through payroll deductions and out-of-pocket expenditures—will pay the remaining $8,584.
“Some families may be surprised to hear their total average healthcare costs are exceeding $20,000 this year,” said Scott Weltz, consulting actuary with the Milwaukee office of Milliman. “While everyone knows the cost of healthcare is increasing, most people who receive health insurance through their employer are insulated from the true costs associated with the care they receive.”
To view the complete MMI, click here.
Paying for oral chemotheraphy
May 14th, 2012
By jeremy.engdahl-johnson
The Washington Post looks at oral oncology and the way insurers pay for such drugs. Here is an excerpt:
People who get traditional IV chemotherapy on an outpatient basis often pay a flat co-payment that covers the drug as well as the cost of administering it. Annual out-of-pocket costs are also typically capped.
Oral anti-cancer medications, on the other hand, are generally considered a pharmacy benefit. Instead of a co-payment, plan members often pay a percentage of the drugs’ cost — up to 50 percent, in some cases — with no annual out-of-pocket limit. And these drugs are expensive, often costing tens of thousands of dollars a year.
In recent years, states have stepped in to address the problem. Since 2007,
19 states and the District have passed laws requiring insurers to provide coverage for oral cancer drugs that is equivalent to infusion drugs, according to the National Patient Advocate Foundation. Five states, including Virginia and Maryland, have passed laws in 2012 alone, and others are considering proposals, according to advocacy groups.
Is oral chemotherapy a cost-effective way to treat cancer? The article addresses this question:
But oral oncology parity laws don’t necessarily drive up costs. According to a 2010 study by benefits consultants Milliman, the estimated cost to most health plans for complying with oral oncology parity laws would be less than 50 cents per member per month.
ACOs and MPL
May 11th, 2012
By jeremy.engdahl-johnson
We’ve blogged often about accountable care organizations (ACOs) and about medical professional liability (MPL). But how do the two tie together? Recent coverage by Best’s Insurance News digs into the connection between the two:
ACOs may be a new market for physician insurers, but the risk insured will be a familiar one.
“How do we approach this market as an opportunity?” asked Chad Karls, principal and consulting actuary for Milliman, Inc., during the session.
The first thing to know is the medical professional liability risks that an ACO will have. “Don’t lose sight of that,” he said. “That is the elephant in the room when it comes to ACO insurance coverage needs. That medical professional liability is the single largest risk.”
Alternatives to the individual mandate: Financial penalties
May 11th, 2012
By jeremy.engdahl-johnson
We’ve been discussing the results of our poll on alternatives to the PPACA individual mandate. The second-most popular idea on the poll was “enforce a penalty that escalates the longer people wait to buy health coverage.” In the Government Accountability Office (GAO) report on mandate alternatives, a range of possible financial penalties are mentioned in conjunction with limiting enrollment windows (which was itself the most popular idea from the poll):
Late enrollees could enroll during subsequent open enrollment periods, or possibly between open enrollment periods, but incur financial penalties. Such penalties could take the form of requiring retroactive payments of missed premiums from the date of the last open enrollment period, or a flat or gradually escalating premium penalty depending upon the length of time without coverage. To encourage individuals to maintain their coverage once enrolled, the premium penalties could decline after a period of continued coverage, until they are eventually eliminated. Other financial penalties could include higher cost sharing for the individual, such as copayments, coinsurance, or deductibles. Another financial penalty could be to reduce or deny subsidies for otherwise eligible late enrollees. Another variation would be to provide a premium discount to all individuals who enroll when first eligible, but withhold the discount from late enrollees.
Of course, as the report goes on to point out, financial penalties might tend to further discourage younger, healthier, but less-wealthy individuals from purchasing coverage, which runs counter to the goals of broadening coverage and reducing costs.
The notion of of using financial incentives and penalties to change behavior is something that has been discussed quite a bit in recent years. For example, we recently looked at how the PPACA raises the level of financial incentives that employers can use to encourage employees to meet wellness targets.
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