Pardon me for ranting but it is too big to ignore. One of the most
explosive sources of inflation in the US economy is the cost of health
insurance, now that house inflation is contained (Owners Equivalent Rent, 25% of CPI, which was flat August to September). The section of the BEA table that monitors health care costs
does not seem to reflect that health insurance premiums are 15%-20%
higher than this time last year. My personal experience is that this rate of change has been an
annual occurance. The reason is not
that the BEA survey does not include hospital charges. But obviously
there is an important disconnect between the cost of health insurance
and the costs reported by medical service delivery components. Here is
some of the BEA's description of how they collect data for all of the
measurement area's.
"The CPIs are based on prices of food, clothing, shelter, and
fuels, transportation fares, charges for
doctors’ and dentists’ services, drugs, and other goods and services
that people buy for day-to-day
living. Prices are collected each month in 87 urban areas across the
country from about 4,000 housing
units and approximately 25,000 retail establishments-department stores,
supermarkets, hospitals, filling
stations, and other types of stores and service establishments. All
taxes directly associated with the
purchase and use of items are included in the index. Prices of fuels and
a few other items are obtained
every month in all 87 locations. Prices of most other commodities and
services are collected every
month in the three largest geographic areas and every other month in
other areas. Prices of most goods
and services are obtained by personal visits or telephone calls of the
Bureau’s trained representatives."
Here are the reported rates of change from September 2009 to September 2010, for the medical areas covered in the BEA survey:
Medical care
........................................................................
3.4
Medical care commodities
.................................................... 2.6
Medical care
services ...........................................................
3.7
Professional services
............................................................ 2.9
The
equally weighted average of these annual rates of change is 3.2. Something big is missing.
My personal experience and a second hand story tell me there is something very wrong in this health care market. Nobody is treated fairly (pun not intended). For example, a son of mine needed oral surgery and was not covered by medical insurance. The surgery was quoted at one price and then they learned that I was paying cash. For the hour I spent in the office, I was treated like a king because they were not going to deal with insurance negotiators who would trim ??%, and they were paid 100% of the fee at the time of the procedure. My daughter had a similar surgery from a different office and was given two estimates of the cost, one if insured and one with a 10% discount if not insured. Hospitals are the best. They apparently do not know what their expenses are. Someone I know well had bypass heart surgery and did not have adequate health insurance. She was told to expect the cost of her surgery to range between $120,000 and $200,000. Her son had to negotiate with the hospital finance office and they settled on a total cost of $80,000! Obviously there are many facts that I do not have that would add a lot of definition to the situation. But I don't think there is anything that would change my discontent with the amount of change that is needed and that was given away in the last session of Congress. The inflation statistics seems to also ignore the severity of this issue.