Yeah... The BLS lists medical services/commodities inflation rate for 2015 at 4.1%/3.6% respectively [1]. Why did my premium go up 20%, then? Why did most people's premiums go up at least 10% or more? Their methodology just doesn't match reality. Just like the 4.9% "unemployment" rate.
BTW, the government has vested interest in under-reporting inflation - the COLA is indexed to it.
There can be all sorts of reasons why your premium went up faster than this: 1) your plan is atypical 2) you're living somewhere or in a demographic that is atypical 3) your insurer didn't increase your premium for awhile, and then lumped all the increases at once.
Just like if you live in the Bay Area, you're going to see annual housing price increases that are large multiples of what the rest of the country sees...
No, I am just self-employed (insured through a small-business association) and need to cover the cost increases myself. The reason other people may not see as much, is because their employers eat up most of the increase.
Also:
From Politico: (10/30/215)
"Rates released by the Obama administration Friday and analyzed by consulting firm Avalere Health found that the lowest cost “silver” plan – the most popular option in the law's insurance marketplaces – will rise 13 percent, about four times the increase for plans this past year."
"Premiums for bronze plans, which cover 60 percent of costs and offer cheaper premiums than silver plans, are also rising sharply this year. The cheapest bronze option will increase by 16 percent on average across the country, according to Avalere’s analysis. "
"Hey! Congrats on that 10% increase in compensation!"
'Huh? My pay hasn't gone up, what are you talking about?'
"Oh, it's not your salary -- your benefits went up. Your employer buys you more health care."
'Oh, wow, so I'm getting more coverage with my health plan? Faster lines? Quicker recovery? Less out of pocket? You're right, that is a pay bump, I need to look more closely!'
"Oh, no, you get none of that, and it's actually worse on most of those criteria; it's just that they're charging more."
'So, I get the same benefits, but someone pays more to get them to me, so that counts as a pay bump?'
I feel like 4% is way too low from what I've seen, but often the reason employees see big jumps is because the employer covers some flat amount, and then the un-covered part is what looks to be jumping.
So if your employer covers 750/month, say, and you were at 740 for 2014, then up 5% is 777 for 2015, then 816 for 2016. For you, that jump is 0 to 27 to 66. That feels like a lot.
This just a theory I came up with just now, though
Every company is different, but as the one who oversees the healthcare benefit for my pico-business, I have the premiums figures at the employer end, and I certainly do not see 4% yoy increases, it is closer to 2-3X that, and while multiple anecdotes are not data, other small business owners I speak with report the same. Likely the 4% surveyed figure is coming from the big employers who have negotiating leverage. These inflation figures come from self-reported numbers (I occasionally get the survey requests), and not from the federal government actually dipping into the insurers' databases and retrieving real data.
The situation is admittedly all kinds of outrageous. Anything short of the immediate (within three months) death of the medical industry as the US knows it will fail to bring about competitive, meaningful, lasting reforms. Personally, I've come to terms with accepting that for the most part, I can only realistically, roughly afford 1960's-level Cuban embargo-like care standards in the US to be able to give my children a better shot: basically, anything really expensive like cancer or some chronic neurological wasting disease (dementia especially), and I'm euthanizing myself with CO2. I terminated my term life insurance upon realizing the odds get better with each passing year that I will come down with a geriatric-related condition, and euthanasia to protect my family's financial standing from medical bills (the number one personal bankruptcy cause in the US) is a disqualifying event in all life insurance policies.
I carry catastrophic coverage to handle a situation like a broken limb, and we choose policies with 100% in- and out-of-network coverage, but situations that become apparent that will develop into really financially-draining scenarios over time will quickly start an evaluation of the breakeven point to pull the ripcord, so to speak. Not pleasant to think about or discuss, but necessary to assure my family's future. I certainly don't advocate anyone else do this, just sharing my own personal planning hoping to see other non-traditional reactions posted.
At about the same time, I rejected out-of-hand the blind acceptance of the party line from the medical establishment, and instead adopted a verify-first-then-trust-the-data approach. If blood panel results I purchase myself over a period of months and years don't mesh with the received wisdom of the medical establishment, then I go with the data and ignore their "wisdom". When you hear "keep doing whatever it is you're doing that is getting these results" from medical professionals enough times, after they incredulously interrogated why you're engaging in what they professionally have been trained to counsel as risky habits, you begin to trust your own judgement. Test, Test, Test, and make incremental, measurable changes. The fitness community over the Net has been of greater help to my fitness level and overall medical condition in the past several years than all the doctor advice I've received over many decades. My personal conclusion is the US farming, food, pharma and medical industries, government regulatory agencies and professional associations have their pecuniary interests so hopelessly intertwined, it is safer to simply assume the industries (not individual practitioners, many of whom deeply care about their corner of the world and are outstanding) select profit over any other factor to the point they are functionally openly hostile to your health.
The initial ACA subsidies are running out so premiums go up. And because premiums go up some young, healthy, but not too wealthy people decide to go without insurance and pay a penalty instead. Especially since if the worst happens you can manufacture a qualifying event to let you buy insurance when you need it. Which might mean even more healthy people leave but hopefully the cycle with reach an equilibrium after a few iterations.
The BLS rate is the amount of money charged to insurers, not the money they charge you I'm afraid.
If you don't like the official statistics you can always compare against private measures like the Billion Prices Project.
The fundamental problem with basket based inflation measures is if gas prices go up or down it's generally an identical good. If t-shirts quality declines the price may drop, but you may need to spend more money on t-shirts.
Sure computers may 'get better', but it's software we care about. If Word 2050 needs a X$ laptop then it does not matter how fast that laptop is it's still the same quality as the laptop running Word 2040.
Net result all inflation measures are off which is one reason so many things keep growing faster 'than inflation'.
If a t-shirt's quality declines, then it's actually getting more expensive, and that should be tracked.
If computers get better, then that should equally be tracked, otherwise you're introducing an asymmetry, where products get better -> price index doesn't change, but products get worse -> price index increases.
In fact, computers have rapidly gotten both better and cheaper over the last decades. A new 486DX2/66 machine ran around $2500 in 1992 -- now a basic desktop shouldn't run you more than $300-400.
First off, "The traditional CPI solution to this problem is to temporarily remove an item from the sample when its quality has changed." Lowering quality is one of the standard ways of dealing with rising production costs so this really does present a large bias.
> gotten both better and cheaper
last decades sure. Last five years somewhat. Next five years ehh, possibly.
But CPI is known to overstate inflation. The reason people think inflation is more than it is is simple - we've been trained from birth to notice prices going up, but not prices going down.
Price increases are bounded by substitution of goods and "what the traffic will bear."
The things - real estate, education, health care - that are inflating most rapidly are doing that because they are subsidized. When you subsidize a thing, it costs more and you get more of it
Ag subsidies are different because that's a sort of Nash equilibrium - the cost of inventory underruns exceeds the mild price increase from overproducing agricultural products.
Any many things have much lower inflation than the numbers show too. I'm reading The Rise and Fall of American Growth right now and one of the things that surprised me is that the same good sold in different ways has it's price tracked separately. So when department stores started offering lower prices than specialty stores that wasn't reflected in the inflation statistics.
BTW, the government has vested interest in under-reporting inflation - the COLA is indexed to it.
[1]http://www.bls.gov/news.release/pdf/cpi.pdf
[2]https://www.ssa.gov/news/cola/