Comparing Manhattan, NY and Manhattan, KS

A new paper by Milliman principals Tom Snook, Ron Harris, and Bob Dobson looks at the many complexities built into health plans. The paper, which just came out today, is available here. For starters, the paper picks up on a familiar topic–the disparity in health costs across different areas. What follows is an excerpt.

The Milliman Medical Index calculates the different costs for a typical family of four living in 14 different major metropolitan areas. This year, the MMI indicated that the average cost for a family living in Miami has exceeded $20,000 ($20,282) while the cost of care for a family living in Phoenix is still below $15,000 ($14,857). The extent of regional cost disparity has often been cited as a major contributor to the relatively high overall cost of healthcare in the United States.

To further illustrate this disparity, consider the cost relativities among five different health plans, looking both at a typical member (or cross-section) of the labor force in Manhattan, N.Y., and a typical member of the labor force in Manhattan, Kansas.

The difference in per-member per-month (PMPM) cost is attributable to differences in both utilization levels and reimbursement rates. Contributors to differences in utilization levels include physician practice patterns, as well as differences in population health status. Demographics do not play a role in the differences in the costs shown in this table, because our analysis is based on normative demographic composition. Reimbursement rate differences reflect the differences in payment levels from health plans, which can be due to regional variation in the general cost of doing business, differing labor costs, local regulations regarding hospital staffing levels and institutional resource development, competitive dynamics, or other reasons.

Geographic Location
Area and Age/Gender




Popular FEHBP


U.S., Labor Force in Manhattan, NY
U.S., Labor Force in Manhattan, KS

Here is Kaiser’s take (including the always-welcome Muppets reference).