Wait a Minute

An accurate but off-the-mark news headline this week proclaimed that health care costs for people insured in the private sector rose twice as fast as inflation in 2010.  But it didn’t mention that health insurance premium prices rose six times as fast.

The Health Care Cost and Utilization Report, 2010 was released by the Health Care Cost Institute (HCCI).  It was based on claims data for 33 million people – one fifth of those with employer-based health insurance.

The bottom line: the consumer price index rose by only 1.6% in 2010, but health care spending was up by 3.3% for the same year.

The report summarized that “prices increased across all categories of service, with outpatient services experiencing the fastest growth.” 

This is bad news for Americans with private health insurance already fed up with low and flat salaries and the high price of health.  The cost of health care now absorbs over one-sixth of our entire gross domestic product, and just seems to grow every year.

But wait a minute.  There was a piece missing in the HCCI report.  It was related to an insured consumer’s most significant health care expensive – the cost of insurance premiums.

That would have been even more newsworthy.  The price of employer-based family insurance coverage increased by 9%, or almost six times the rate of inflation, for policies renewed in the same time frame.

You won’t find that number headlined in the HCCI report, but you will find it in an equally impressive study released by the Kaiser Family Foundation and Health Research and Educational Trust last August.

How was it possible for HCCI to overlook so significant a cost increase? 

It might have something to do with HCCI’s funding.  HCCI was formed just last September, “with an aim” according to its website, “of becoming the nation’s leading source of information on health care costs.” An article appearing on May 21, 2012, in Kaiser Health News makes it clear that insurance companies are the sources of both HCCI data and funding.

This bias doesn’t make the data in the report bad.  But it does suggest that the actual aim of HCCI might be better re-stated as “becoming a leading source of information on health insurers’ payments.” 

Especially if HCCI plans to continue to leave out the information about health insurance premiums.

Because when you add that into the mix, here’s another headline. 

At a time when – according to insurance companies themselves – health care costs rose by just over 3%, private insurance companies increased consumer health insurance premiums by three times that amount.

Adding insult to this injury, consumers got hit not once, but twice.  HCCI noted that out-of-pocket health spending increased by 7.1%.  In other words, insurance companies also required consumers to pay twice their fair share of the increase in health care prices.

This begs the question: where did all this money go?

If the purpose of the HCCI report was to deflect our attention away from this, it won’t work. 

The public may not have all the facts at its fingertips, but a March, 2012, survey sponsored by NPR, the Robert Wood Johnson Foundation, and the Harvard School of Public Health was released this week.  It found that 77% of all respondents, and 75% of sick ones, said that insurers “charging too much money” is a major reason for rising health care costs.

Americans don’t buy it when insurers point fingers at providers, any more than they believe major providers who just point fingers at insurers.  In the survey, consumers blamed hospitals and drug manufacturers for the rise in health care costs just as much as they did insurance companies.

So here’s the real bottom line. 

When – in the private sector – health care costs increase twice as fast as CPI, out-of-pocket costs increase four times as fast as CPI, and the cost of insurance increases six times as fast, there’s plenty of blame to be spread around.

The one entity we can’t blame for the increase is the one at which everyone usually points a finger – our government.

This in no way lets the government off the hook.

Instead, the data make a compelling case that elected officials should do more, not less, to contain all health care costs – if for no other reason than to protect the interests of the people who elected them. 

Will they do this, or will they leave us at the mercy of the marketplace?