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Sunday, August 22, 2004

Health insurers find new profits in higher premiums

As everyone knows, health care costs to individuals, families and businesses are continuing to rise at a record rate. In an article today, Leslie Berestein does an excellent job of analyzing some of the causes.

One impetus for the price hikes is particularly jarring:

"Net income for the nation's health insurers was $10.2 billion last year, according to Weiss Ratings Inc., which rates the strength of financial institutions. That's almost twice the profits earned in 2002, and almost 14 times the $736 million earned in 1999... Weiss analyst Donna O'Rourke said the industry is thriving for two main reasons: ongoing premium increases and 'expense reduction,' which includes reconfiguring health plans to shift more of the cost of services to consumers...

[In 1988] an average insurance policy for a family of four cost $179 a month, or $286 in today's inflation-adjusted dollars, according to the Chicago-based Health Research and Educational Trust.

This is roughly a third of the $829 a month it took to insure the same family last year. And for that higher price, today's policy typically comes with higher office-visit co-payments, additional hospital deductibles, extra fees for brand-name prescription drugs and other out-of-pocket expenses."


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