2017 Milliman Medical Index

By May 22, 2017Commentary

Large actuarial firm Milliman produces what it calls the Milliman Medical Index every year.  The 2017 version has been released.   (Milliman Index)   The core figure is what the health care costs are for the average family of four with an employer-sponsored PPO plan.  This is just health care costs, not administrative expense or profits for insurers.  For 2017 that cost is $26,944 up 4.3% from 2016.  That is the lowest rate of increase since 2001, but obviously well above economic growth, inflation and personal income growth.  Out of that amount, employees bear $11,685 or 43%.  The portion of the costs borne by the employee have steadily grown over the years.  Of the employees share, $7151 is premium contribution and $4534 is out-of-pocket spending under the plan.  Note that even though the plan is paying for 83% of the cost of covered services, the family still has over $4500 or almost $400 a month in out-of-pocket spending.   Note too that the over $7000 in average premium contribution is considered by most economists to be foregone wages, in other words, the employee would be making $7000 more in income a year if he or she wasn’t kicking in for health insurance.

The drug component of spending accounts for only 17% and rose 8% from 2016, down a little from prior years, but obviously still very high.  The rapid increases in drug spending have made that category’s contribution to total costs grow quickly in recent years.  As do most analyses of health spending, this report warns about the looming impact of continued specialty drug introductions.   About one-half of all spending is for hospital services, inpatient and outpatient.  Inpatient costs grew by 3.7% and outpatient by 4.2%.  The rate of growth in hospital services was the lowest recorded since 2001, contributing to overall slow rate of growth.  Physician services, at 30% of spending, rose 3.2%, mostly due to unit reimbursement increases.  A continued gloomy picture for employees in regard to health care costs.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

More posts by Kevin Roche

Leave a Reply