Quote-of-the-day mailing list
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Subject: qotd: Important: Milliman Medical Index now $22,030
Date: Thu, 23 May 2013 08:36:01 -0700
From: Don McCanne <email@example.com>
To: Quote-of-the-Day <firstname.lastname@example.org>
2013 Milliman Medical Index (MMI)
The MMI represents the projected total cost of medical care for a
hypothetical American family of four (two adults and two children)
covered under an employer-sponsored PPO health benefit program.
* As measured by the 2013 MMI, the total annual cost of healthcare for
a typical family of four covered by an employer-sponsored preferred
provider plan (PPO) is $22,030.
* The 6.3% increase over 2012 is the fourth consecutive year of
decreasing trends, but the total dollar increase of $1,302 is the fourth
year in a row of increases over $1,300.
* Of the $22,030 healthcare cost for a family of four, the employer
pays about $12,886 in employer subsidy while the employee pays the
remaining $9,144, which is a combination of $5,544 in payroll deductions
and $3,600 in employee out-of-pocket costs. For employees, this
represents a cost increase of 6.5% over last year's total employee cost
* We expect that the emerging reforms required by the Patient
Protection and Affordable Care Act (ACA) will have little impact on the
cost of care for our family of four in 2013 because this family tends to
be insured through a large group health plan. Some of the most
far-reaching reforms will not become effective until 2014, and they are
focused primarily on the individual and small employer markets.
Additionally, while those reforms will likely have immediate impacts on
premium rates in those markets, it is unclear whether they will have any
near-term effects on growth in the cost of healthcare services for a
Comment: According to the Milliman Medical Index (MMI), the average
projected cost for health care today for the typical family of four with
an employer-sponsored preferred provider plan (PPO) is $22,030. That
includes an employee contribution to the premium of $5,544,
out-of-pocket expenses of $3,600, both totaling $9,144, plus an employer
contribution of $12,886 which is actually paid by the employee through
forgone wage increases.
Median annual household income is now $51,404 (February 2013). Although
that does not represent the same demographic group as working families
with four members, it does give you a general perspective of the burden
of today's health care costs on families and households.
An important point made in the MMI report: "the Patient Protection and
Affordable Care Act (ACA) will have little impact on the cost of care
for our family of four in 2013 because this family tends to be insured
through a large group health plan," and ACA is "focused primarily on the
individual and small employer markets." Since employment remains the
primary source of health care coverage, the majority of families can
anticipate little relief from these health care cost burdens.
A fundamental flaw in employer-sponsored coverage is that the entire
burden of health care costs is placed on the employee (when considering
forgone wages), yet it is clearly not affordable for low- or
middle-income families. Progressive financing of health care is an
ACA provides at least modest income-indexed public subsidies which
extend into the middle-income ranges, though they are still inadequate.
Premiums for employer-sponsored plans are tax deductible, which is a
form of public subsidy (tax expenditure), but since the premiums
represent forgone wages, this tax subsidy benefits higher-income
individuals much more than those with lower incomes. Thus the financing
of health care through employer-sponsored coverage is terribly
regressive (lower-income families pay a much larger percentage of their
income for health care than do higher-income families).
This outrageous $22,000 burden on typical working families should be
enough to provide us with an incentive to fix our health care financing
system. A single payer national health program that includes everyone
and is financed with progressive taxes is precisely what we need. Keep
in mind this $22,000 burden when you discuss health care reform with
others. ACA is not going to make that go away.