The Milliman Medical Index Confirms What Employers Already Know: The Status Quo Is Unsustainable

The 2025 Milliman Medical Index (MMI) estimates the average cost of employer-sponsored health coverage for a family has reached $35,000. That’s not a forecast, it’s the new reality.

If you’re an employer offering health coverage, this number isn’t surprising. You’ve been watching premiums rise year after year while absorbing the majority of the increased premium despite the repeated promises from brokers and carriers about “cost control.” Meanwhile, even though employees, as a group, are not shouldering a greater percentage of the cost of coverage, the increased nominal dollar amounts, both in contributions and out-of-pocket costs – prompting them to ask hard questions about the value of the coverage you provide.

The MMI is just the latest in a long line of data points confirming what employers already know, continuing the status quo means continuing to overspend.

What the Numbers Say: Milliman vs. Kaiser

Two of the most credible sources in employer health plan research, Milliman and the Kaiser Family Foundation (KFF), are sounding the same alarm: employer healthcare costs are surging. While the exact figures vary based on methodology and population, the direction is clear and consistent.

Milliman’s 2025 Medical Index estimates the total annual cost of employer-sponsored family coverage at over $35,000.
Kaiser’s 2024 Employer Health Benefits Survey places the average at $25,572.

The difference comes down to focus. Kaiser reports across a wide spectrum of employers, while Milliman concentrates on large employers with higher-cost, higher-utilization populations. Despite the gap, both sources point to a troubling trend: costs are climbing faster than inflation, wages or employer budgets.

When it comes to employee contributions:

Milliman estimates workers contribute roughly $9,100 toward family coverage.
Kaiser reports an average contribution of $6,296.

And while Milliman doesn’t provide deductible data, Kaiser found that the average single coverage deductible reached $1,787 in 2024.

The takeaway? Regardless of whose data you use, the pattern is the same, employers are spending more and assuming greater financial risk, employees are paying more in nominal dollar terms and traditional plan designs are offering little in return.

What That Means for Employers

According to Milliman, employers and employees continue to split the cost of coverage but the total spend keeps climbing. So, even though employers continue to bear the majority of the financial burden, the increased nominal dollar amounts negatively impact workers’ finances and degrade the perceived value of coverage. This model is no longer just expensive. It’s inefficient.

Most traditional PPO plans operate with:

Inflated network pricing
Minimal transparency
Limited provider accountability
Built-in cost shifting from Medicare and Medicaid price fixing

Plan sponsors face rising stop-loss premiums, reduced employee satisfaction and greater fiduciary exposure. Workers are navigating ever high deductibles, surprise billing and a system they don’t understand and don’t trust.

Breaking the Cost Cycle: Reference-Based Pricing

The traditional network model isn’t built to contain costs but rather to preserve them.

We saw this trend strengthen as many plan sponsors were primarily focused on compliance – iteratively adjusting their health coverage from 2010 until recently, to ensure compliance with the Affordable Care Act. Many deferred taking strategic action while focused on Health Reform, the No Surprises Act and other legislation.

Reference-Based Pricing (RBP) offers employers a smarter alternative, using a fixed, rational benchmark (usually a multiple of Medicare) to pay providers instead of accepting inflated billed charges.

RBP isn’t new but it’s getting harder to ignore, especially as costs continue to accelerate.

The benefits of RBP include:

20–40% average savings on medical claims.
Greater price transparency and control.
Elimination of arbitrary network contracts.
A more sustainable benefit design.

Implementing RBP takes more than a pricing model, it takes legal strength, participant advocacy and a proactive compliance strategy.

How aequum Supports Smarter Plan Design

aequum helps self-insured employers transition from passive cost absorption to active plan protection. aequum’s legal, operational and participant support services are designed to defend plan assets and reduce exposure, especially under a reference-based pricing structure.

aequum’s services include:

Balance Billing Defense: Protecting plan participants from unreasonable charges and defending against aggressive provider tactics.
Overpayment Recovery: Identifying and recovering overpayments, restoring value to the plan.
Regulatory Compliance: Ensuring your plan meets federal requirements under the No Surprises Act (NSA), ERISA and DOL guidance.
Dispute Resolution and Legal Support: Representing plans and participants in disputes, at no additional cost to the plan or its members.
Data Reporting and Plan Optimization: Delivering insights into cost drivers, provider behavior and claim trends to inform smarter decisions.

What Employers Should Do Now

The Milliman Index isn’t just another data point. It’s one more confirmation that business as usual no longer works.

aequum recommends plan sponsors:

Evaluate existing plan costs against RBP alternatives.
Review stop-loss contracts for compatibility with non-network reimbursement models.
Identify opportunities to restructure plan design for transparency and control as well as improve participant preparation for medical costs, today and tomorrow.
Educate employees on their rights and protections under the NSA.
Partner with compliance experts to reduce exposure and improve sustainability.

This Isn’t About Cutting Benefits It’s About Taking Control

The $35,000 benchmark from Milliman isn’t the top, it’s an average! And, it’s just the latest stop on our decades-long journey. The question for employers is no longer if healthcare costs will rise each year but how much more you’re willing to absorb before taking action.

aequum provides the tools, expertise and legal strength to help employers stop overpaying, protect their plans and deliver high-value coverage that works for their workforce, not against them.