Where are the variations in healthcare costs? Family of four spending doubles in nine years

According to the Milliman Inc. "Milliman Medical Index -MMI " US families of four are paying double of  what they paid($9,235) in 2002  today at $19,393. The family expenses have gone up by 7.3% from 2010 numbers that sure is more than double of the average US inflation rate.Left alone this increase is going to further escalate according to the MMI.

So where are the variations in costs that innovation, supply chain and marketing  folks are interested in? Keep in mind that an actuarial view like the MMI just tries to identify where the biggest insurance risks are historically, so that insurance folks can work on their prices to cover risk. Look at the page 11 of the Milliman Report and here are some initial thoughts in understanding the items that cause variations in healthcare costs.

  1. Age and Gender– older folks and men have higher life insurance premiums -right?
  2. Personal health status– remember the dreaded "pre-existing condition"  that attracts higher premiums?
  3. Geographic area– not surprisingly some places have low cost- is it only real estate?
  4. Provider variations– Some doctors and hospitals have their act better than others and lead to a resolution of the illness without having the patient bounce around.
  5. Insurance coverage- spending is less per family when the plan is good and the co-pay is lesser. Does the high co-pay deter cheaper but early intervention?

All in all a great study and a good point to start looking at opportunities for reducing cost, both for families and businesses who are even harder hit with increasing healthcare costs.

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