Wall Street Risk Engineers Build Hedge for Health-Cost Spiral

Actuarial firm Milliman is attempting something financial markets have yet to pull off: turning one of America’s fastest-rising costs, health-care inflation, into something investors can hedge with a single trade.

The nearly 80-year-old company filed Friday to launch its first ever exchange-traded funds, the Milliman Healthcare Inflation Guard ETF and the Milliman Healthcare Inflation Plus ETF. The new ETFs would be guided by the company’s own predictive model of insurance claims and medical usage data while aiming to meet the inflation rate of US employer-sponsored health care.

Milliman’s Health Trend Guidelines, which has long helped insurers set premiums ...