Average PPO Cost Hits All Time High – Milliman

While cost increases for families enrolled in employer-sponsored preferred provider organizations have slowed since 2010, average total costs per family still hit an all-time high, according to a report released Tuesday by Seattle-based Milliman Inc.

Average health care costs for a family of four enrolled in a PPO through an employer hit a record $20,786 in 2011, according to the 2012 Milliman Medical Index. The 2012 figure represents a $1,335 increase, or 6.9%, over 2011. “The average rate of increase this year dips below 7% for the first time since we began analyzing these costs (in 2005), but the total dollar increase is still the highest we have seen,” said Lorraine Mayne, a Salt Lake City-based principal and consulting actuary for Milliman. “This helps illustrate the challenge of controlling health care costs. When the total cost is already so high, even a slower rate of growth has a serious impact on family budgets.”The distribution of spending for the typical U.S. family remains fairly even, the report said. Inpatient care and physician services each account for 32% of spending in a year, outpatient care accounts for 18% and pharmacy services account for 15%.

Other factors

Milliman’s study also analyzed health care costs in 14 cities in an effort to highlight the role that geographic factors such as demographics and state insurance laws play in determining health care costs for a typical family. In all but three cities studied—Seattle, Atlanta and Phoenix—health care costs exceeded $20,000 a year, the report said. Nine out of the 14 cities studied registered average per-family costs in excess of the national average. Miami had the highest per-family average cost of $24,965, while families in Phoenix were the furthest below the national average at $18,365.The report noted that the Patient Protection and Affordable Care Act, which faces an uncertain future as some of its core elements are evaluated by the U.S. Supreme Court, has not yet had any significant impact on health care costs for families enrolled in PPO plans through an employer.Depending on the Supreme Court’s decision—likely to be rendered next month—the law’s effects could be much more pronounced in the long term, the report said