Wednesday, September 12, 2007

Just Can't Win

The headline reads "Health Insurance Premiums Vault Past Inflation."

The only reasonable response is "And so?"

In the very same edition of USAToday, we find that housing costs (which include ever-increasing property taxes) easily eclipse even health insurance, while the price of gasoline continues to climb to Olympian levels, as well.

What do these things all have in common (other than the obvious)?

Things cost more to buy.

It's called economics, and it's not that complicated: prices for goods and services rise to meet demand, and some things are more in demand than others.

And so, to borrow a line of thought from Mike, how come we don't see a push for nationalizing mortgage brokers? Or gas stations?

It's kind of frustrating that, according to USAToday, health insurance premiums rose a measly 6.1% last year, but that's not good enough: that increase was higher than the rate of inflation. But that really tells us very little: as noted above, the cost of a lot of things we need and use increased at a higher rate. What's critical, and missing from the article, is the rate of medical inflation. After all, the increasing cost of providing care drives the cost of financing it.

The other salient fact which jumps out in that story is this 'throw away:' a business owner, by simply adding a modest deductible, saw his rates climb a paltry 5%, two years running. That in itself is remarkable, but he also added an HRA (Health Reimbursement Arrangement) to mitigate his employees' increased exposure. The best part? "So far, not very many of his workers have needed to take him up on the offer."

Now what does that tell us?

Well, for one thing, the owner has a wise and competent agent, who helped him to see how a simple rearrangement of benefits could help his own, and his employees', bottom line. But the other, perhaps more important message is that a lot of folks pay for insurance that they don't even use.

Unfortunately, according to the Kaiser Foundation study on which the article's based, the number of insured employees who've enrolled in higher deductible plans hasn't grown much, which is a shame.

Just think how much lower rates would be if they did.
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