February 24th, 2010
05:48 PM ET

CNN Fact Check: Do some health insurance rate increases outstrip inflation?

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Jim Dexter

During a briefing this week, White House Press Secretary Robert
Gibbs attacked health insurance companies for rate increases.

"You've heard both the president, on numerous occasions, and the
secretary for health and human services discuss unjustifiable rate increases by insurance companies that are experiencing profits and whose rate increases - proposed rate increases - greatly outstrip health care inflation," Gibbs said.

Gibbs' comments echoed a statement President Barack Obama made during his weekly media address this past Saturday.

The president noted that Anthem Blue Cross is seeking rate hikes
averaging 25 percent in California, and he mentioned similar rate increases in Kansas, Michigan and Maine.

Fact Check: Are some health insurance companies seeking increases that "greatly outstrip" health care inflation?

–According to the U.S. Department of Health and Human Services, the increase in national health care expenditures - often referred to as "health care inflation" - was 5.7 percent last year. The Consumer Price Index showed a 3.2 percent increase in the cost of medical care.

- A 25 percent premium increase would outstrip either of these increases.

- A spokesman for the Kaiser Family Foundation notes that the rate
increases the administration cited were for individual policies, not
employer-based group health insurance, which is much more common.

–According to a 2009 report by America's Health Insurance Plans, an industry trade organization, nine out of 10 working-age Americans with private health insurance have group policies obtained through their employer.

–According the Kaiser Family Foundation's Employer Health Benefits Survey, family premiums for employer-based group health policies rose about 5 percent last year.

- The Kaiser Family Foundation notes that rates for individual health
plans are much more volatile than rates for group insurance. AHIP says
individual health insurance premiums vary considerably state by state,
"reflecting a variety of factors, including premium rating and underwriting rules, differences in health care costs, demographics and consumer benefit preferences."

- Robert Zirkelbach, a spokesman for the trade association, told CNN
that premiums are being driven up not only by increased medical costs, but also by a weak economy "that is causing some younger and healthier people to drop their insurance." That leaves insurers with a smaller pool of healthy people and a larger percentage of older people with higher medical expenses for insurers to cover, he said.

Bottom Line: Yes, some health insurance companies are seeking increases of 20 to 25 percent, which "greatly outstrip" health care inflation. These rate hikes do not, however, appear to be typical of the premium increases facing the average American.

Filed under: Health Care • President Barack Obama
soundoff (3 Responses)
  1. Claudia, Houston, Tx

    No one ever talks about the huge bonuses insurance companies payout to doctors and employees, it's common practice.

    February 25, 2010 at 9:54 am |
  2. J.V.Hodgson

    The Bottom line of your fact check says 2 things to me but I'm just a simple voter and someone who works and needs health care for me and family.
    I am still totally puzzled ( from an Actuarial importantly or inflationary perspective as well) why an individual policy holder is any different " health insurance risk wise" than someone who's coverage is bought by corporate America i.e big companies. They are just as likely proportionately (actuarially) to get sick as individual policy holders!?
    You qoute a 25 % average increase for individual policy holders versus a 5-6% Inflation rate of medical costs. You do not say how much the average corporate policy cost has been upped but I guess it's in the range of 7-8% at least, maybe more.
    Sorry both would be way ahead of the all inclusive "inflation rate" nationally. And for sure of national wage awards and Income growth of average Americans which has declined!!
    Why... answer profit driven needs of insurers, and more to the point why should "medical inflation"c/f national inflation levels be different at more than double levels. Answer again the profit driver.
    Grow up America, starting over on health care reform is the road to ruin and growing national deficits.
    Worse still the Supreme Court ( a joke of a name) has just ensured that MONEY< MONEY< MONEY is all that matters in American politics. The votes who are they. well they are the people that allow the system to be gridlocked, gridlocked, gridlocked, money, money , money driven and cannot even ban the literally asking for a bribe to get a vote of its own elected officials thru so called pork which has nothing to do with the basic legislation being voted on!!
    Stop just writing about it do me and voters a POLL, the question:-
    Mr/Mrs voter do you want to ban " ANY Pork additions" to basic legislation before the House or Senate??
    We all know they are added for local state Rep or Senatorial election purposes ( to get a bill passed on party lines) and not necessarily in the overall national interest.
    If they ( pork) are put forward as a bill, OK, and let it be voted on and benefit the whole nation!!
    The point is Pork at the national government level is not a viable democratic option, pay for it yourself in your state.
    Once outside State governance institutions i.e national congress your responsibility is to national interests and benefits and leave the rest to state elected officials, with or without your support from a national perspective.
    Problem, ideology is in the way not just Republicans but Democrats as well.

    February 25, 2010 at 2:07 am |
  3. Annie Kate

    The health insurance I had from Blue Cross last year was being increased for this year – twice the premium cost and up to 6 times on co-pays depending on what it was. The increases put the policy in a "why bother" category to me because it wasn't going to pay for much; I found another option and dropped Blue. The health insurance companies raise their rates with no regard to their customers; the classic picture of price gouging and utter contempt for their customers.

    February 24, 2010 at 10:05 pm |

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