Milliman Medical Index shows why insurance costs are rising

The health care consulting firm Milliman Inc. reported that health care costs for families rose again in 2011. A family of four insured through an employer will average costs of $19,393 this year, up 7.3 percent ($1,319) from last year. Milliman also found:

Health care expenses for families have more than doubled in the last nine years.
Workers are being required to shoulder a greater percentage of those expenses. Payroll deductions for insurance increased by 9.3 percent this year, while employers' share of the cost fell 6 percent.
Employers have increasingly been offering health plans with higher deductibles and co-payment limits.
Employers are covering about 59 percent of employees' health care costs. Employees cover about 24 percent of the cost through their insurance payment and another 17 percent in out-of-pocket costs.

Milliman's annual Medical Index also explores the reasons for the cost increases. The study found:

"For the third year in a row, outpatient facility costs have increased more than any other component; 90 percent of that growth is attributable to increases in unit costs, while (10 percent) is the result of increased utilization."
"Hospital inpatient care experienced the next highest rate of growth."
"Pharmacy costs rose 8 percent. About a quarter of the increase came from increased usage, while most of the change came from higher average prices."
"Premium rate reviews do nothing to directly influence the underlying drivers of health care costs but can put pressure on insurers to find ways to keep medical costs down."
"The effort to comply with the MLR requirements may result in a one-time decrease in premium trends but does not influence the health care cost trend."