The annual Milliman Medical Index (MMI) measures the total cost of healthcare for a typical family of four covered by a preferred provider plan (PPO). The 2012 MMI cost is $20,728, an increase of$1335 or 6.9% over 2011. The rate of increase is not as high as in the past, but the total dollar increase was still a record. this is the first year the average cost of healthcare for the typical American family of four has surpassed $20.000.
If that number seems high, it’s because many of the costs are hidden from view. For instance, your employer is footing about $12,144. But that’s still money that would likely have gone to you otherwise. Then, employees kick in another $5114 in contributions. But those might come out of your paycheck before you get it, so again, the cost is hidden. What the typical family of four definitely sees is the $3470 in out of pocket costs each year.
On the spending side, that family’s spending goes mostly to physicians ($6647) and inpatient care ($6531). The rest goes to outpatient care ($3699) and pharmacy costs ($3056), leaving $795 for “other”. The amount spent in each category has gone up every year for the last five years.
And what will the PPACA do about this? (emphasis mine)
While several aspects of healthcare reform would have meaningful impact on the cost of insurance coverage, the effect on the total cost of care is very limited for our family of four. For example, medical loss ratio rules and stringent review of health insurance increases may reduce insurer profits and also put pressure on insurers to be as efficient and low-cost as possible. But the cost of care for this family of four is still $20,728, which excludes insurer profits and administrative expenses.
While efforts to be more administratively efficient may lead to lower premiums, they do not directly affect the cost of delivering healthcare to the MMI family of four.
What will it take to significantly affect the cost of care? Some of the movements already under way may help. Examples include better care coordination, a focus on outcomes and efficiency, increased patient accountability, and healthier lifestyle choices.
Whether the nation is next debating new legislation from scratch or next steps to take us beyond the financing issues of PPACA to meaningful cost reforms, the amounts at stake will not go unnoticed.
The PPACA is not enough. We need more, not less.