The annual Milliman Medical Index measures the total cost of healthcare for a typical family of four covered by a preferred provider plan.  The 2012 MMI cost is $20,728, an increase of $1,335, or 6.9% over 2011.  The rate of increase is not as high as in the past, but the total dollar increase was still a record.  This is the first year the average cost of healthcare for the typical American family of four has surpassed $20,000.

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Less competition among insurers can help reduce provider prices, but with a side-effect of increasing premiums and lack of coverage. Rate regulation can help counter the latter. Another approach is to increase the bargaining clout of consumers, e.g., by aggregating them in exchanges. This would make the individual market behave a bit more like the group market, for which Bates, Hillard, and Santerre found no relationship between insurer market concentration and coverage.

Enrollment is increasing in consumer-directed health insurance plans, which feature high deductibles and a personal health care savings account. We project that an increase in market share of these plans—from the current level of 13 percent of employer-sponsored insurance to 50 percent—could reduce annual health care spending by about $57 billion. That decrease would be the equivalent of a 4 percent decline in total health care spending for the nonelderly. However, such growth in consumer-directed plan enrollment also has the potential to reduce the use of recommended health care services, as well as to increase premiums for traditional health insurance plans, as healthier individuals drop traditional coverage and enroll in consumer-directed plans.

The Massachusetts Taxpayers Foundation reports that 98% of the state’s residents have health insurance while premiums are down for the second consecutive year for the 173,000 people who purchase coverage through the state’s exchange  (individual and small group)–all at a total incremental cost to the state of $453 million or 1.4% of the state’s $32 billion annual budget (2.8% if you include the share picked up by the federal government).

The Massachusetts Taxpayers Foundation concludes: “It would be premature to claim that the state’s historically high health care costs have been tamed, but there are encouraging signs of progress.”

The individual health mandate surely passes constitutional muster under settled judicial principles….The Court’s precedents establish without question that Congress may regulate intrastate economic activities that Congress (not the Court) reasonably concludes have a substantial effect on interstate commerce. The existence of such congressional authority is especially clear when the challenged provision itself is part of a comprehensive legislative scheme that regulates interstate commerce….

The same is decidedly not true of the testing hypotheticals raised by members of the Court concerning mandates to purchase broccoli or automobiles: Individuals who wait to purchase such goods until they are needed do not undermine a larger regulatory scheme or shift costs to other consumers of those goods or to any other third party. Nor is the health mandate comparable to a requirement to purchase burial insurance, because no showing can be made that Congress would be responding to any real national problem….

The purported limit on congressional power favored by the mandate’s opponents—between constitutionally permissible regulation of “activity ” and unconstitutional regulation of “inactivity ”—is simply unknown to Commerce Clause jurisprudence, is wholly unworkable, and makes no economic sense.  

The Medicaid expansion that we’re talking about this afternoon and the provisions we talked about yesterday, we’ve been talking about them in terms of their effect as measures that solve problems… in the economic marketplace that have resulted in millions of people not having health care because they can’t afford insurance.

There is an important connection, a profound connection, between that problem and liberty. And I do think it’s important that we not lose sight of that.

That in this population of Medicaid eligible people who will receive health care that they cannot now afford under this Medicaid expansion, there will be millions of people with chronic conditions like diabetes and heart disease, and as a result of the health care that they will get, they will be unshackled from the disabilities that those diseases put on them and have the opportunity to enjoy the blessings of liberty.

And the same thing will be true…for a husband whose wife is diagnosed with breast cancer and who won’t face the prospect of being forced into bankruptcy to try to get care for his wife and face the risk of having to raise his children alone. And I could multiply example after example after example.

In a very fundamental way, this Medicaid expansion, as well as the provisions we discussed yesterday, secure of the blessings of liberty.