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  • Health Care Costs Continue to Rise

    The annual Milliman Medical Index (MMI) shows that the fourth straight year, Health Care costs rose by at least 7%.  The MMI found that for 2011 the average cost of health care for a family of four covered by a preferred provider plan now stands at $19,393, up from $18,074 in 2010. The 2011 tally reflects the consistent rise  in health costs over the last decade. As a  comparison, the MMI for 2002 was $9,235.

    The study notes that even though hospital costs are only 48% of total health care spending, increases in facility spending accounted for 60% of this year’s total increase in costs. For the third year in a row, spending at outpatient facilities rose faster than any other component of patient care, climbing 10%. Milliman attributes the growth in cost to the fact that existing outpatient services have increased in price while new, more expensive services continue to emerge. Pharmacy costs also rose by 8%. Although a quarter of that increase came from broader usage of pharmaceuticals, most of the change came from higher average prices.

    These rising costs present a challenge for insurers, which are facing more political pressure to keep premiums down. Indeed, the report calls health care reform “the elephant in the room” and predicts that insurers will become subject to greater scrutiny of their rates. “Premium rate reviews do nothing to directly influence the underlying drivers of health care cost, but can put pressure on insurers to find ways to keep medical costs down,” the report states.

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