2020 Milliman Medical Index
By Christopher S. Girod, Paul R. Houchens, David M. Liner, Andrew L. Naugle, Doug Norris, and Scott A. Weltz
21 May 2020
Key findings of the 2020 MMI include:
- Cost increases have continued to be mostly “moderate.” For an average person, healthcare cost grew by approximately 4.1% from 2019 to 2020. That rate is roughly consistent with rates over the past five years, and is definitely moderate relative to rates from 10 years ago, which were twice as high. Nevertheless, the cost increases continue to outpace gross domestic product (GDP) growth, which is roughly half the rate of healthcare cost growth.3 Recently, hospital costs have taken center stage, growing more quickly than costs for other services, climbing approximately 15% over the past three years, versus 10% for all other services combined.
- COVID-19 will have big impacts on healthcare costs in 2020. That much is certain. However, the impacts will manifest as some very big cost increases (for direct COVID-19 care), and some very big cost decreases (for deferred and forgone services). On average, the net outcome is still highly uncertain. We know, for example, that COVID-19 testing and treatment costs are new in 2020. However, these amounts may be dwarfed by the spending reductions resulting from deferrals of care. At this time, there is tremendous uncertainty around the net effect on costs. Therefore, in this year’s MMI report we have not made explicit adjustments to our 2020 cost projections to reflect COVID-19 impacts.
- For the first time, this year’s report looks at the effects of managed care on costs. Since its first edition in 2005, the MMI has focused on “what is”—namely, what employer-sponsored healthcare costs are on average nationwide. Very little time has been spent discussing “what could be”—what could healthcare costs be under an ideal system? Milliman’s research indicates that effective use of managed care principles could reduce overall healthcare costs for the MMI family by approximately 25%, which would lower the family’s annual costs from $28,653 to $21,490.
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About the Author(s)
Doug Norris
2020 Milliman Medical Index
In 2020, the cost of healthcare for a hypothetical American family of four covered by an average employer-sponsored preferred provider organization plan is $28,653, according to the Milliman Medical Index.
Christopher Girod, Paul Houchens, David Liner, Andrew Naugle, Doug Norris, Scott Weltz