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Another Perspective On Health Insurance Premium Trends

By July 26, 2023Commentary

Actuaries face an intense process to become certified to do their work, which basically involves understanding cost trends well enough to help insurance companies set premiums for coming periods.  Health insurance requires actuaries and they don’t have an easy job trying to understand unit price and utilization trends.  A new report from the American Academy of Actuaries attempts to assess health premiums for 2024.  The report finds that health insurance is still adjusting to the post-epidemic world, in which the government will be providing less direct payment for CV-19 services and many people will lose Medicaid coverage.  The report also identifies inflation-related cost pressures on providers as leading to likely significant increases in provider rates, which will in turn lead to higher premiums.

The federal government tracks health insurance premiums in a bizarre manner that hugely underestimates actual increases, which in turn gives a false picture on overall inflation.  The price of health care services and health insurance is rising rapidly in reality and those price increases affect almost every American.  Sooner or later they will show up in the official inflation figures as well.  Health care isn’t getting cheaper any time soon.  (AAA Report)

Join the discussion 2 Comments

  • Dan says:

    Just saw a story on PBS evening news about PBMs. A small privately owned drug store owner said they are the main cause of the drug price increases. He gets less then it costs him selling drugs so they are basically driving him out of business.

    The PBM guy on the show says it the drug companies fault.

    Interested in your take?

    • Kevin Roche says:

      The main difficulty the smaller owners have is that they don’t have the scale to compete with the larger chains, which make more money by selling other stuff than drugs. Think about what you see when you walk into a Walgreens or a CVS or a Walmart. The independent drug stores tend to be more reliant on drug sales, which at a retail level are not super profitable for anyone. Drug prices are set by the manufacturers, who abuse their monopoly patent position. Everything else in the system is noise. Most PBMs don’t do the best job of getting low prices from the manufacturers because many of their fees are based on the price. But the villains in high drug prices are the manufacturers.

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