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Milliman: Annual Healthcare Costs Doubled in Under Nine Years

Margaret Dick Tocknell, for HealthLeaders Media, May 12, 2011

It has taken less than nine years for healthcare costs to double for the average family of four covered by a preferred provider organization, the 2011 Milliman Medical Index shows.

And there's more bad news, employers are passing more of the costs onto their employees.

The 2011 MMI healthcare cost is $19,393, a 7.3% or $1,319 increase over 2010. But here's some good news, that's the lowest annual rate of increase in more than a decade.

The report looks at five components of the MMI: inpatient facility costs, outpatient facility costs, professional services, pharmacy and other. Among the findings:

  • Hospital inpatient costs accounted for more than one-third of the $1,319 increase. While utilization was flat, costs per day increased by more than 8% from 2010 to 2011. Inpatient costs totaled $6,068 or 31% of a family of four's total annual healthcare bill.
  • Increased utilization helped grow the cost of outpatient facility care by 10% to $3,404. For the third year the increase in the cost of outpatient facility care outpaced all of the other MMI components.
  • The total dollars paid for physician care increased by 4.4% to $6,329. Physician services accounted for one-third of the total cost of care.
  • Pharmacy costs rose by 8% to $2,847. Higher average drug prices accounted for about 75% of the increase with higher usage accounting for just 25% of the increase.
  • The cost of miscellaneous other services such as durable medical equipment, ambulance services and home health posted a 6.9% increase to $745.

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1 comments on "Milliman: Annual Healthcare Costs Doubled in Under Nine Years"


American Medical Association (5/12/2011 at 7:20 PM)
This study further illustrates that families are paying more for health care, and that rising health care costs must be addressed. With the ultimate goal of achieving better value for our health care spending, the American Medical Association has identified broad strategies to address rising health care costs; these strategies include reducing the burden of preventable disease, making health care delivery more efficient and reducing nonclinical health system costs that do not contribute to patient care. While physicians have an important role to play, everyone, including patients and lawmakers, should work together to improve the overall value of our health care spending.