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Milliman Indicates 2009 Medical Cost for 'American family of four' Exceeds $16,700 Based on 7.4% Cost Increase
Date:5/18/2009

Current economic conditions and the unknown effect of healthcare reform create unprecedented cost uncertainty

SEATTLE, May 18 /PRNewswire/ -- Milliman, Inc., one of the premier global consulting and actuarial firms, announced today that average total medical spending for its "typical American family of four" reached $16,771, an increase of $1,162. While cost trends are decelerating for the third-straight year, the total-dollar increase is the highest since 2006.

The Milliman Medical Index (MMI) tracks the changes in average yearly healthcare costs when the family of four is covered by an employer-sponsored preferred provider organization (PPO). The new Milliman study provides not only a total cost number for this family but also the share of costs between employers and employees. It also offers cost differences among 14 metropolitan areas.

"Among lost jobs, lost revenue, strained government budgets, consumer insecurity, and an uncertain future, the macroeconomic climate is affecting healthcare costs," said study co-author Lorraine Mayne, Milliman principal and consulting actuary. "Throw in healthcare reform and you have a cost trend environment unlike any we've seen in recent memory."

"The macroeconomic cost pressures are being borne both by employees and employers," said MMI co-author Ron Cornwell, Milliman principal and consulting actuary. "Employers still pay the majority -- 59% this year. Employer subsidies have increased about $500 while employees have seen increases of about $650, including $500 for employee contributions and $150 for employee out-of-pocket costs."

Medical costs for a family are determined by the number, type, and cost of healthcare services that they utilize and the amounts that the employee's health plan pays medical providers for these services. Utilization of medical services for a particular family varies significantly based on the family's ages, geographic area, health status, and other factors. Among the 14 metropolitan areas Milliman annually studies, healthcare costs varied by more than 30%, with the most-expensive city, Miami, becoming the first to pass the $20,000 per-family mark and the least-expensive city, Phoenix, still below $15,000.

The MMI is based on Milliman's analysis of historical claim data and understanding of trends in utilization and cost. The complete Milliman Medical Index is available at www.milliman.com, or by calling Lorraine Mayne at 801.924.1390 or Jeremy Engdahl-Johnson at 646.473.3021.

About Milliman

Milliman is among the world's largest independent actuarial and consulting firms. Founded in Seattle in 1947 as Milliman & Robertson, the company currently has 49 offices in key locations worldwide. Milliman employs more than 2100 people, with a professional staff of more than 1100 qualified consultants and actuaries, including specialists ranging from clinicians to economists. The firm has consulting practices in healthcare, employee benefits, property and casualty insurance, life insurance, and financial services. Milliman serves the full spectrum of business, financial, government, union, education, and nonprofit organizations. For further information, visit www.milliman.com.


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