New Study Measures Average Family Medical Spending Over a 5 Year Period

Milliman, Inc., one of the premier global consulting and actuarial firms, announced today that average medical spending for the "typical American family of four" reached $12,214 in 2005. The finding is contained in the first annual Milliman Medical Index (MMI). The MMI measures average yearly healthcare costs when the family of four is covered by an employer-sponsored Preferred Provider Organization (PPO). The new Milliman study determined that the average annual medical cost for a family of four increased by 9.1% from 2004 to 2005. The average annual rate of increase for the four year period 2001-2005 was 9.8%.

"The Milliman Medical Index provides a benchmark by annually assessing the changes in those costs over the past 5 years," said study co-author William Thompson, a Milliman principal and consulting actuary. "Unlike most surveys that focus exclusively on 'employer' cost increases, the MMI analyzes what it really costs the U.S. economy to deliver health care, and how this burden is allocated between employers and employees," Thompson added.

"The MMI examines the key drivers and the components of actual medical spending, including physician charges, prescription drugs and hospital charges," said Robert Cosway, Milliman principal and consulting actuary. "We break out and measure the rate of consumer spending versus the rate of total spending for health care in a given year. Based on a typical PPO plan design, Milliman estimates that the typical American family of four would pay $2,035 out of their own pocket through member cost sharing in 2005," study co-author Cosway added.

Medical costs for a family are determined by the number, type and cost of healthcare services that they utilize and the amounts that the employee's health plan pays medical providers for these services. Utilization of medical services for a particular family varies significantly based on the family's ages, geographic area, health status and other factors. The MMI is based on Milliman's analysis of historical claim data and understanding of trends in provider contracting. The complete Milliman Medical Index is available at http://www.milliman.com/ , or by calling Jim Loughman, Director of Media Relations and Public Affairs, at 203-698-0008.

About Milliman

Milliman, whose corporate offices are in Seattle, serves the full spectrum of business, financial, government, and union organizations. Founded in 1947 as Milliman & Robertson, the company has 32 offices in the United States as well as offices in Bermuda, Hong Kong, London, Madrid, Mexico City, Milan, Munich, Sao Paulo, Seoul, and Tokyo. Milliman employs approximately 1,850 people, including a professional staff of more than 850 qualified consultants and actuaries. The firm has consulting practices in employee benefits, healthcare, life insurance/financial services, and property and casualty insurance. It is a founding member of Milliman Global, an international organization of consulting firms serving insurance, employee benefits, and healthcare clients worldwide. For further information, visit http://www.milliman.com/

Source: Milliman

CONTACT: Jim Loughman, Director of Media Relations and Public Affairs,
Milliman, +1-203-698-0008

Web site: http://www.milliman.com/