Tag Archives: Doug Norris

Milliman Medical Index: Healthcare costs reach $6,553 for the average American, $28,653 for hypothetical family of four

Milliman today released the 2020 Milliman Medical Index (MMI), which measures healthcare costs for individuals and families receiving coverage from an employer-sponsored preferred provider organization (PPO) plan.

“This year healthcare costs grew by approximately 4.1%, which is consistent with recent years but still outpaces growth in gross domestic product,” said Chris Girod, co-author of the Milliman Medical Index.

In 2020, healthcare costs for our hypothetical family of four reached $28,653. Healthcare costs for the average person are at $6,553. While these are averages, the MMI allows for greater specificity thanks to an interactive tool that was first released last year.

“The MMI can now estimate the cost of healthcare for different types of families,” said Paul Houchens, co-author of the MMI. “Using our interactive cost tool, you can choose the demographic factors of your particular family—such as age, gender, and location—and see how they contribute to your family’s own healthcare costs.”

To use the interactive tool, click here.

As it has for more than 15 years, the MMI continues to look at five components of healthcare costs, including inpatient and outpatient care, pharmacy, physician services, and other services.

“Hospital costs have stolen the show in recent years, increasing faster than other components,” said Scott Weltz, co-author of the MMI. “Hospital costs have increased by approximately 15% in the past three years, with other services growing 10% in that time.”

One of the things that makes the MMI unique is that it calculates both employer and employee contributions to healthcare costs, including out-of-pocket costs incurred at the point of care.

“Employers and employees are equally absorbing this year’s 4.1% cost increase,” said Dave Liner, co-author of the MMI. “Over time, economic changes and other forces tend to create an ebb and flow in how cost increases are shared by employers and employees.”

New this year, the MMI contemplates the potential for decreased costs using managed care.

“If we visit the land of ‘what if’ and apply optimal care management practices we could see healthcare costs for the typical family land 25% lower,” said Doug Norris, co-author of the MMI. “To date, this reduction is more aspirational, but huge potential exists in the American system for lower healthcare utilization and more efficient care.”

The COVID-19 pandemic introduces tremendous uncertainty to any estimate of 2020 healthcare costs, with major variables including the duration of the pandemic, the amount of care that may be deferred as a result of it, and the possibility of people losing their employer-sponsored coverage. Thus the 2020 MMI does not include an explicit adjustment for COVID-19.

To view the complete MMI, click here.

COVID-19 and the future cost of coverage in the commercial health insurance market

Although pricing actuaries are trained to project future costs in environments of heightened risk, COVID-19 has introduced unprecedented disruption and uncertainty. The pandemic has affected all aspects of the healthcare industry and the American economy, altering the landscape in ways that may both increase and decrease expected costs. This volatile and uncertain environment also presents an extraordinary challenge for health plans developing rates for 2021 commercial coverage.

This paper by Milliman’s Jeff Milton-Hall, Tom Murawski, and Doug Norris is intended to help commercial health plans navigate this evolving environment. The authors discuss key considerations for how the pandemic and its aftermath could affect the cost of health insurance coverage in 2021.

Critical Point takes a look at potential COVID-19 healthcare costs

The COVID-19 pandemic will have far-reaching implications for both short- and long-term healthcare costs in the United States. One of the most important questions is how much will COVID-19 cost the healthcare system? Milliman consultants Pamela Pelizzari, Stoddard Davenport, Doug Norris, and Matt Kramer provide some perspective in this episode of Critical Point.

What is a Critical Point anyway?

How did Milliman’s podcast get its name? In this episode of Critical Point, Hans Leida and Doug Norris—both health actuaries and math PhDs—discuss how they decided on “Critical Point” for the name of the podcast. Hans and Doug talk about various aspects of mathematics, including topology, optimization theory, and chaos—and why the term “critical point” is so relevant in the actuarial world today.

To listen to this episode of Critical Point, click here.




Risk adjustment modifications in view of potential CSR subsidy termination

If the cost-sharing reduction (CSR) subsidies of the Patient Protection and Affordable Care Act (ACA) were eliminated, it could expose insurance carriers to a substantial increase in selection risk related to their particular mixes of business. In August, the Centers for Medicare and Medicaid Services (CMS) announced its intention to propose a set of risk adjustment modifications for states in which insurance carriers raise silver premiums in response to potential CSR subsidy termination.

In this paper, Milliman’s Jeffrey Milton-Hall, Doug Norris, and Jason Karcher explore the CMS proposal along with the current ACA risk adjustment program and three other potential alternative modifications to risk adjustment in response to the possible elimination of CSR funding.




The old and the beautiful: How age and gender affect costs and premiums in commercial healthcare

We generally consider living a long life an important goal, and it certainly does beat the alternative. But one side effect of getting older is that, as we age, we typically acquire additional acute and chronic medical conditions, and the prevalence of many common chronic medical conditions increases significantly. Age/gender rating is an area in which actuarial considerations are often in direct tension with social or public policy considerations: there is a natural tension between the policy goals of making coverage more affordable for older people (with higher average costs) and the goal of encouraging younger people (with lower average costs) to purchase health insurance coverage.

In an article first published in the magazine The Actuary, Milliman consultants Doug Norris, Hans Leida, Erica Rode, and Travis (T.J.) Gray explore how age and gender affect costs and premiums in commercial healthcare.