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We’ve heard a lot in recent months about how much the cost of just about everything has been going up, from butter and eggs to gas and airline tickets. But I bet you haven’t heard a lot about how much the cost of health insurance has gone up over the past year.
Well, it has gone up much faster than just about everything–a whopping 24.3% between August 2021 and August 2022–according to the Bureau of Labor Statistics.
That’s way more than the price of food overall, which increased 11.4% during the same period, and just about as much as the price of gasoline, which jumped 25.6%.
According to the Bureau’s September Consumer Price Index report, all items in the index increased 8.3% collectively over the previous 12 months. So when I saw how much the price of health insurance had gone up relative to overall inflation, I assumed it must have been because the cost of drugs and medical services had gone way up. But no.
During those same 12 months, medical care services overall increased 5.6%. Drilling down into the charts a bit, I saw that physicians’ services increased 1.1% during the year, while hospital services and prescription drugs were up 4.0% and 3.2% respectively. It’s worth noting that the big health insurers reported massive profits last year. Now we know one reason why.
When you look at just the seasonally adjusted numbers for May through August 2022, you’ll see a similar pattern. From July to August, physician services were up 0.2% and hospital services were up 0.7%. But health insurance was up 2.4% during that month.
I know that the cost of health insurance fluctuates from year to year, so I went back and looked at several years worth of CPI reports. I found that over the past decade, the price of health insurance actually declined between August 2013 and August 2014 (-1.8%), between August 2017 and August 2018 (-0.3%), and between August 2020 and August 2021 (-9.9%--undoubtedly because of lower health care utilization during the first year of the pandemic).
But I also found that the huge increase in the cost of health insurance over the past year was no outlier when you look at several years worth of data. The cost of health insurance was up 14.8% between August 2011 and August 2012; 9.1% between August 2015 and August 2016; 18.6% between August 2018 and August 2019; and 17.4% between August 2019 and August 2020. In all of those years, the increase in the prices of medical goods and services was in the low- to mid-single digits.
The BLS uses an incredibly complicated formula when it comes to health insurance because of the nature of the beast. As the BLS noted:
The CPI has been unable to consistently control for changes in quality such as policy benefits and risk factors. Price change between health plans of varying quality cannot be compared, and any quality adjustment methods to facilitate price comparison would be difficult and subjective. As a result, we developed an indirect approach called the retained earnings method.
Still, the increases in most years over the past decade are eye-popping and something Members of Congress and other lawmakers should be paying attention to. Why does the health insurance inflation have to be so much greater than prescription drugs and physician and hospital services in most years?
Here’s another way to look at what has been happening to health insurance premiums over the past decade. As Kaiser Family Foundation reported last November, the average family premium for coverage through an employer increased 47% between 2011 and 2021, from $15,073 to $22,221. While employers continue to pick up most of the tab, their workers are contributing an ever-increasing percentage of it.
And then there are the out-of-pocket requirements, which have been increasing at an even faster clip. Deductibles alone jumped 68.4% over the last decade.
Bloomberg reported this week that the cost of health insurance might be poised to decrease in the coming months. But don’t hold your breath. Just yesterday, the Washington Post reported that “premiums in the health-care program for federal employees and retirees will increase by 8.7 percent on average for 2023 — the largest increase in more than a decade.”
The Post noted that the increase “is significantly larger than the 3.8 percent average increase for 2022, although closer to the 5-7 percent range of most other recent years.”
In August, HR consultancy Mercer predicted that the cost of health insurance per employee will increase 5.6% next year–much higher, as usual, than the increase in workers’ wages.
On the bright side, they’re practically giving TVs away these days–down 19.1%. And now might be a good time to buy jewelry and watches–down 0.3%–if you have any money left after paying your premiums and out-of-pockets.
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Pulling back the curtains on how Big Health is hurting Americans and how we got to this point.
The cost of healthcare has become such a nightmare for me that I spent the last couple years of my life recording and publishing an album about it
https://campblicated.bandcamp.com/album/the-war-on-health-mixtape
We really need a Government Ran Single Payer Health Care System, with absolutely no role for these Greedy Parasite Private For Profit Health Insurance Companies. The current Democratic Party is completely in bed with these Greedy Parasites. I see no hope for change.