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Average family medical costs top $18,000: Milliman

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Average medical costs for a typical U.S. family of four enrolled in an employer-sponsored preferred provider organization plan rose $1,303 this year to $18,074, the largest dollar increase since the Milliman Medical Index began in 2005.

The costs, which include employer and employee premium contributions, copayments and deductibles, grew an average 7.8% this year, up from 7.4% last year, Seattle-based Milliman Inc. said Tuesday.

Now averaging $10,744, the average employer share surpassed $10,000 for the first time for the typical family of four’s PPO coverage, Milliman said.

These costs could grow as a result of health care reform, Milliman predicted.

“This year’s MMI offers an interesting example of that old axiom, ‘The more things change, the more they stay the same,’” study co-author Lorraine Mayne, a Milliman principal and consulting actuary, said in a statement.

“The cost of group insurance continues to increase at a historically consistent pace, even with reform now the law of the land. While there will be short-term cost implications, especially for particular employees and certain employers, this year reflects a continuation of the prevailing cost trends,” Ms. Mayne said.

Chris Girod, also a Milliman principal, consulting actuary and co-author of the study, noted that the economic environment and high unemployment rate may have already affected health care costs.

“When employees are laid off, there are also cost ramifications for the remaining employees,” Mr. Girod said.

Medical costs vary considerably by region, ranging from an average of more than $20,000 in Miami, New York and Chicago to $16,071 in Phoenix, the least expensive of 14 metropolitan areas that Milliman studies.

Hospital inpatient costs posted the largest rate of increase, growing 9.8% this year compared with 7.7% last year. Milliman noted that most of the inpatient increase was driven by higher average unit costs with little change in utilization.

By contrast, the rate of increase in physician costs declined to 5.2% this year from 6% last year, while pharmacy costs increased 6.1% this year compared with 7.5% last year.

The Milliman Medical Index is based on Milliman’s analysis of historical claims data, utilization trends and associated costs. The “2010 Milliman Medical Index” is available online at www.milliman.com.