
Quality healthcare comes at a huge price. While common people who spend from their pockets on healthcare find it difficult to get high-quality healthcare at an affordable price, employers also face issues due to the rising healthcare costs.
A Business Group on Health (BGH) employer survey predicted that in 2021 there could be a possible 5.3% rise in employee healthcare costs.
A recent Milliman Medical Index (MMI) survey showed that healthcare costs increased by 4.1% from 2019 to 2020.
2020 Milliman Medical Index Insights
According to the survey insights, despite the COVID-19 uncertainties, the healthcare costs of a normal American family grew by an approximate 4.1% from 2019 to 2020.

The Milliman Medical Index (MMI) showed that in 2020, the estimated healthcare cost for an American family of four people by the employer-sponsored preferred provider organization (PPO) plan is almost $28,653, while the average individual cost was around $6,553.
Although the average healthcare costs have supposedly increased by 4.1% in the last year, the numbers have been consistent over the past five years, and relatively moderate to the rates in the past decade.
The recent hospital costs have risen by an approximate 15% in the past 3 years, compared to the 10% of all the other healthcare services, including inpatient and outpatient care, pharmacy, physician services, and others.
COVID-19 Impact on 2020 Healthcare Costs
The healthcare costs in 2020 have been as uncertain as the situation. While the direct COVID-19 care invited some exorbitant cost rises, the deferred care reduced the expected costs. So, the average net healthcare cost numbers are still uncertain. And so, experts could not really project the 2020 net costs owing to the impact of the new COVID-19 treatment costs and the dwarfed deferred care costs.
Effects Of Managed Care On Healthcare Costs
Until late, most MMI studies have focused on the average employer-sponsored healthcare costs. However, the recent study had Milliman researching the impact of managed care on healthcare costs. The research revealed that implementing the right managed care principles can lower the average healthcare costs by almost 25% for the MMI family. This brings down the annual costs from $28,653 to $21,490 for the family.
The pandemic has impacted the global economy, and every country and industry is looking at effective cost-cutting strategies to keep the costs under control. Health plan sponsors and insurance companies are drafting plenty of strategies to control service utilization and withdraw unnecessary services from the current healthcare system.
Studies have shown that the hospitals receive $1 of every $3 spent towards healthcare. In 2019 alone, the projected American hospital care costs were close to $1.3 trillion. However, the recent pandemic has changed the numbers, which are still uncertain. While the COVID-care could keep the hospital care prices soaring, it could be dwarfed by the deferred care services. Also, the innovation and implementation of digital health solutions and telemedicine has paved the way to virtual care, reducing the hospital visits.
Understanding what healthcare costs would be in an ideal system could help in the crafting effective managed care policies that not only reduce healthcare costs, but also offer the right quality services for the needed on time.