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The Milliman Family Health Care Cost Index

By June 1, 2021Commentary

Another of my favorite health care reports.  Milliman is a large actuarial firm, they help health plans project the costs of health care for the future year and set premiums.  For many years they have tracked changes in the cost of health care for a typical four-person family in this report.  (Milliman Report)   The Milliman Index assumes that the family is covered by a standard employer-sponsored health plan.  In 2019 the annual cost for the family was $27,233.  In 2020, that cost dropped to $26,078.  The drop was caused by the missing of so much health care during the epidemic.  Milliman is projecting, however, that for 2021 the cost will rise to $28,056.   The epidemic has affected health care in many ways.  CV-19 caused an increase in spending for treatment of the resulting disease and for vaccines.  That was more than offset by missed care.  Telehealth, which can be less expensive than in-person visits, rose dramatically.  Many who died during the epidemic had a number of serious health conditions and were costly to the system.  So sorting out the lasting financial impact is difficult.

For the typical person, 19% of health care spending is for inpatient hospital care, 29% is for outpatient care, 28% goes to physician and other professional fees and 22% is spent on drugs.  During the epidemic spending on all types of services but drugs declined.  For 2021, an increase is projected in all categories.  The total cost of health care for the family under this employer health plan is split between the employer and the family.  The employer usually pays most of the premium and the family picks up the remainder of the premium and has cost-sharing for specific services, including copayments, coinsurance and deductibles.  For 2021 Milliman is estimating that the employer will pay 58% of the total cost, the employee will pick up 16% through a premium contribution and 26% through cost-sharing.  In 2021, the employer will bear almost all of the cost increase, according to Milliman.  This is a very helpful report to get a general sense of how the cost of a typical employment-related health plan gets handled.

Join the discussion 2 Comments

  • Rob says:

    It is also very important to keep this in mind when one hears “news reports” about corporations not increasing wages at the rate of inflation. Wages are only the cash component of total compensation but the reports are designed to mislead to push an agenda.

  • rob says:

    Wow, that’s a lot of money. And double ouch if you don’t get benefits from your employer, which never made sense to me in the first place why employers should be involved in peoples’ healthcare… hey, why don’t they buy our groceries too? It’s no wonder some people choose to just give up and let the govt take care of them.

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