Miami has highest healthcare costs in country for private insurance - Miami Herald

The Miami area continues to have the highest healthcare costs in the country, according to the latest edition of the Milliman Medical Index.

The average annual cost of an employer-sponsored, preferred provider organization (PPO) for a family of four runs $24,965 in the Miami area, the highest of 14 cities surveyed by Milliman, the national consulting firm. The total includes all employer and employee costs.

The report confirms that private insurance costs follow the trends of Medicare's expenses. For years, the Miami region has ranked at or near the top of the nation for Medicare, with the average senior often costing twice as much a year as one in Minneapolis-St. Paul, according to Dartmouth researchers.

Steven Ullmann, a healthcare policy professor at the University of Miami, said Wednesday there are several reasons for high healthcare costs in South Florida, including an oversupply of equipment and services, and providers shifting costs to employer-based plans to make up for the high numbers of uninsured.

The 2012 annual Milliman index, released Tuesday, reported that for the first time ever the national average family policy exceeded $20,000 — coming in at $20,728. Even so, the rates of increase appear to be slowing, with the 2012 figure an increase of 6.9 percent over 2011, the slowest growth in the 12 years that Milliman has been tracking costs.

The Milliman report notes most people don't think their healthcare costs are that high because they think only of out-of pocket costs, which average $3,470 annually for co-pays and deductibles, while a few also calculate payroll deductions, which now average $5,114, meaning employees are now paying an average of $8,584 a year, with the remainder paid by employers.

In recent years, employers have been pushing more of the costs onto workers. In 2012, the employer portion increased 6.7 percent, while payroll deductions went up 7.2 percent, according to Milliman.

The biggest increases in costs come from out-patient services, which grew 8.6 percent, Milliman found. Physician costs grew only 5 percent nationwide.

Miami's costs were 120 percent of the national average — higher than New York City and Chicago. Phoenix had the lowest costs in the survey: $18,365 for a family of four.

UM's Ullmann said Miami has an "ironic situation" with an unusually large numbers of physician specialists and "a lot of diagnostics, with an MRI [magnetic resonance imaging] on every corner." In other businesses, he said, over-supply tends to drive prices down, but in healthcare, it drives costs up because providers often order more tests and other treatments because "you need to pay the debt."

What's more, Ullmann said, the region's propensity for malpractice lawsuits means many physicians can't afford liability insurance. To protect themselves, many doctors practice "defensive medicine," often ordering any possible test they can think of.

Fraud also is a major factor in driving up South Florida's costs, Ullmann said. Add to that the fact that Miami-Dade County has 600,000 uninsured residents and the state has reduced Medicaid rates by more than 15 percent the past two years, meaning that providers need to look to employer-based insurance to get rates needed to offset losses elsewhere, Ullmann said.

Over time, Ullmann and many other healthcare experts say, this situation will mean growing numbers of employers will not be able to afford insurance, increasing the ranks of the uninsured and causing yet more cost-shifting to employers still providing coverage in a never-ending spiral that can be fixed only by healthcare reform. The federal Affordable Care Act has been challenged on constitutional grounds and is awaiting a decision by the U.S. Supreme Court.

"With the law now in the Supreme Court," Ullmann said, "this becomes an interesting puzzle. ... Even employers who want to do the right things are finding it more and more difficult."

17 May, 2012