Posts Tagged ‘Milliman’

Healthcare Costs Have Doubled in Just Nine Years

Wednesday, June 1st, 2011

"Where does it hurt?"

American families have seen their healthcare costs rise by more than 50 percent over the last nine years, a trend that shows no sign of reversing, according to a report from the actuarial consulting firm Milliman, Inc.

Healthcare show few signs of dropping, according to a report released Wednesday by the actuarial consulting firm.  When you add in employers’ contributions, this year’s total healthcare cost for a family of four more than doubled to $19,393 from the $9,235 reported in 2002.  The 2011 figure represents a seven percent increase compared with 2010.  The primary reason for the rising costs are primarily due to price increases in categories like pharmacy, inpatient or outpatient hospital care and doctors’ office visits.  Lorraine Mayne, one of the report’s authors, said these charge increases are a bigger factor than changes in how Americans use healthcare.  Even the passage of the Patient Protection and Affordable Care Act, which started phasing in during 2010 and aims to eventually cover millions of uninsured people, had virtually no impact on healthcare costs in 2011, Mayne said.  She doesn’t believe that new law will have any “direct, immediate impact” on the trend.

In an important finding, the study found that employers are making workers shoulder an even bigger share of total health care expenses.   The employee portion of costs paid for a family of four covered by employer-sponsored health insurance will rise to approximately $8,008 this year from $3,634 in 2002.  That is an additional $84 a week from household budgets for healthcare.  Of the $1,319 yearly increase, workers’ out-of-pocket costs rose 9.2 percent in 2011.  That outpaced the 6.6 percent increase in 2010.  Payroll deductions for insurance coverage climbed 9.3 percent this year, an increase over the previous year.  Adding insult to injury, employers’ share of their workers’ healthcare costs fell six percent in 2010, compared with eight percent the previous year.  Of the $19,393 annual cost, employees’ share is moving closer to 50 percent, according to Mayne.  “Employees are paying $8,000 of the $19,000.  That’s a decent amount much larger than other areas of consumer spending.  What we’ve observed in the past few years is employers have increasingly been offering health plans with higher deductibles and co-insurance, co-payment limits,” she said.

The rise in outpatient care is making the difference. For three consecutive years, outpatient care has led all other categories in cost increases – as high as 90 percent.  “Unit costs are increasing both because the same services have increased in price and also because new, more expensive services continue to emerge,” the report says.  Hospital costs represent the second reason for last year’s increase (for the most part because acute care is so expensive), followed by physician care, drug costs, and other types of care, such as durable medical equipment and home healthcare.  People can rein in some costs by moving to a different part of the country, according to Milliman.

Healthcare was costliest in Miami,  where spending averaged $23,362.  New York came in second at $22,785 and Chicago third at $21,996  The three lowest-cost cities were Phoenix, which averaged $17,336; Atlanta, which averaged $18,292; and Seattle, which averaged $18,536.  “These cost differences result from variation in local practice patterns and from differing costs for health care goods and services,” said Chris Girod, a Milliman principal and consulting actuary.