According to actuarial consultant firm Milliman, average medical expenses for a family of four rose by 9.6% last year. Interestingly, this tracked with average annual increases for the past 4 years, as well. Milliman expects that these rates will stay in the 9 to 10% range for the foreseeable future.
The numbers are based on medical claims, including:
■ office visits (37% of total costs)
■ inpatient hospital services (30%)
■ outpatient expenses (another 15%)
■ and rx (also at 15%, and much lower than I'd have thought)
What surprised me the most (aside from the relatively low rx number), was that the greatest rate of inflation was in- and out-patient expenses. Counterintuitively [ed: ooooh! a $3 word!], the rise in pharma costs slowed significantly.
Bob Cosway, one of Milliman's consulting actuaries, averred that "There have been more and more drugs going off patent, and more therapeutic classes have good generic drugs available. We think many of those market forces will continue for pharmacy."
He also indicated that technology, new drugs and managed care policies have allowed more medical problems to be handled with outpatient services and medications, rather than the more expensive inpatient care.
The report (which you can read here) also shows that the different components are trending at different rates. Rx costs, for example, increased almost 13% between 2004 and 2005, while hospital services (inpatient and outpatient) as well as physician costs grew at rates of about 8%.
Of course, this will have an impact on health insurance costs; it's not just greedy insurance companies looking to increase market share and profitability.