Milliman’s risk management team will be listing two active exchange-traded funds (ETFs) to meet increasing healthcare costs in the U.S.
The global consulting and actuarial firm’s Financial Risk Management (FRM) division will list the Milliman Healthcare Inflation Guard ETF (MHIG) and the Milliman Healthcare Inflation Plus ETF (MHIP) to a lineup of ETFs combatting financial risks for multiple parties, including governments, institutions, companies, workers, and retirees.
The first fund, MHIG, intends to meet healthcare costs for the average individual utilizing an employer-provided health plan in the U.S. The MHIP aims to exceed U.S. healthcare cost inflation overtime, Milliman stated.
According to Milliman, the ETFs will use an actively managed mix of health sector and related equities, bonds, including U.S. treasuries, TIPs, and corporate bonds, and alternatives like commodities and liquid alternative strategies, to generate returns that correlate with cost changes for the average individual enrolled in an employer-provided health plan.
The portfolios will utilize a quantitative model based on Milliman FRM’s research and its analyses on healthcare inflation.
“The rising cost of healthcare is such a complex, foundational issue—and it is one that our clients and most all Americans have been grappling with. Healthcare inflation is a great place for us to start carefully crafting ETF solutions, and they fit squarely with Milliman’s mission to protect the health and financial well-being of people everywhere,” said Bret Linton, Milliman’s chair.
Healthcare costs have escalated in past years and could climb in years ahead. Milliman’s 2025 Retiree Health Cost Index estimates that the average 65-year-old couple retiring in 2025 will spend approximately $588,000 for medical costs in retirement, assuming enrollment in Medicare. The findings did not include costs for long-term care, dental, or over-the-counter medications.
A separate analysis from Fidelity found that an average 65-year-old couple will spend upwards of $172,500 on healthcare costs in retirement, representing a 4% increase compared to the year prior.
“Following multiple years of healthcare cost inflation well above the rate of goods in the broader economy, health insurance premiums are set to rise the most in 15 years.” added Hans Leida, principal and consulting actuary at Milliman. “Managing and planning for cost increases, also known as the healthcare trend, has been central to our work, but clients have lacked a formulaic way to invest this multi-hundred-billion-dollar pool of capital that aims for an investment return equal to healthcare inflation. The data-driven investment solutions we intend to offer will provide a new tool for all stakeholders in the industry—and individuals—to manage this risk and potentially realign incentives.”
Workers or their financial advisors could use the ETFs in their health savings accounts (HSAs) and individual retirement accounts (IRAs).
The Milliman Financial Risk Management team currently advises $229 billion in assets.