The fifth annual Milliman Medical Index™ (MMI™) measures average annual medical spending for a typical American family of four covered by an employer-sponsored preferred provider organization (PPO) program. The MMI provides a consistent benchmark of healthcare benefit costs by annually assessing the changes in those costs over the most recent five-year period.

The MMI looks at key components of actual medical spending and charts the changes in these components over time, including cost changes for employers and employees. In addition to national cost trends, the MMI includes results for 14 major American metropolitan areas to illustrate how widely medical costs can vary by region.

While the MMI has always had broad implications for the healthcare sector, it takes on new importance this year as the country embarks on a discussion of how best to reform the U.S. healthcare system. The MMI offers useful context that can inform this discussion by offering a cost benchmark for employer-provided coverage, which remains a primary source of healthcare insurance.

Key MMI findings include:

• The total 2009 medical cost for a typical American family of four is $16,771, compared with the 2008 figure of $15,609. This is a 7.4% increase from 2008 to 2009.
• This is the third straight year of decreasing cost trends. Even so, the $1,162 increase is the highest since the 2006 increase of $1,169, when cost trends were at 9.6%.
• Every category of costs except inpatient and outpatient facility care experienced lower cost trends than last year.
• This is the third consecutive double-digit percentage increase in the amount that employees spend for healthcare services. This is primarily due to increased employee contributions, as out-of-pocket cost-sharing trends were more modest.
• The current economic environment has significant implications for healthcare costs. The consequences of employers' lost business, consumer insecurity, and provider revenue pressures affect healthcare utilization, charges for healthcare services, and who pays for the healthcare. The unprecedented uncertainty has accelerated cost increases in some ways and at the same time has reduced certain categories of utilization (e.g., elective procedures).