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|Gold||+$3.70 to $1,320.70|
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We all know the cost of health care and health insurance is surging. But just how much are those costs rising? That’s where a brand new study from Weiss Ratings comes in.
We reviewed data from 784 health-care insurers around the nation. The sample included both private insurance firms and those with publicly traded parent companies, companies that took in a total of $450 billion in premium income last year.
Here’s what we found happened in the first quarter of this year, a period where Obamacare shifted into high gear:
Overall premiums rose a hefty 5.9 percent, or $12.44 per month, to $224.28. That followed a 2.7 percent increase in 2013.
Private insurers who don’t have shareholders to answer to raised prices by 2.7 percent. But public companies jacked up their premiums by much more: 13.4 percent. The cost of insurance from those firms has now breached the $300-per-month mark!
Insurers are generally required to spend 80-85 percent of customer premiums on medical expenses, with few exceptions. Thanks to health-care inflation, those claim costs are rising steadily — by 3.99 percent in the first quarter and 3.34 percent in 2013. At public insurers, costs escalated even more — a whopping 11.1 percent.
These rising costs almost certainly reflect some impact from Obamacare, and I doubt we’ll see any change in trend. The Wall Street Journal recently evaluated the early filings that are starting to trickle in from insurers for 2015. The news isn’t good for health care consumers.
Many insurers are asking for another round of large premium hikes. In nine out of ten states, the largest insurers are looking to raise rates by anywhere from 8.5 to 22.8 percent.
|Many insurers are asking for another round of large premium hikes.|
One analyst cited in the report, Richard Evans of SSR Health LLC, expects another 5.4 percent in medical costs this year. That means insurers are likely to have little trouble justifying hefty premium hikes to regulators and insurance commissioners — ensuring that the lion’s share of those hikes will stick.
We’ll have to see how the Federal Reserve reacts to ongoing inflation in health care. And we’ll have to see how employers behave in response.
Does this news push the Fed to hike rates sooner than it otherwise might?
“Do more employers drop coverage altogether or cut worker hours to offset their own surging health care expenses?”
Do consumers demand higher wages to compensate for their increasing costs?
Do more employers drop coverage altogether or cut worker hours to offset their own surging health care expenses?
Let me know what you think in the comment section. I’m also eager to hear of your own personal experiences — are you facing rising health care costs? Have you essentially been priced out of the market for health insurance? Are there any money-saving recommendations you can make that might help your fellow investors fatten their bottom lines? Here’s where to share them.
|OUR READERS SPEAK|
Yesterday’s piece on the NSA and the amount of unrelated material swept up in terrorism investigations generated a ton of comments on the website. You also shared some useful tips on how to keep information somewhat more private in today’s interconnected world.
Reader Butch B. said: “Why is the NSA holding on to personal information of innocent people when those people are in no way a threat to national security? The information should be scanned for real threats (vs. perceived threats) and if no threat exists, the information should be dumped. Ask the IRS how, they seem to be the experts at getting rid of information.”
Reader Gilbert W. said we’re not headed toward a Big Brother society. He maintained we’re already there. His additional comments: “The ends are the same, just the means are different. Rather than a screen with Big Brother’s face everywhere, we have PCs, smart phones, televisions and cars watching or recording our every move. Political correctness is the precursor to Newspeak. I only hope there is no Room 101.”
Meanwhile, Reader Bev said she was “more concerned about business and Internet companies collecting my personal information and selling it than the government screening my phone calls and e-mails to check for terrorists.” Her rationale: “I would rather not get blown up than not have the government search e-mails.”
Bev provided some of her best advice for preserving your privacy: Refuse to give your cell-phone number to Internet services and businesses … pay cash whenever possible except for business expenses … make internet purchases over the phone when possible instead of on the computer … refuse to provide personal information on surveys … and avoid saving your log-in and password information on your computer.
You can find other suggestions that were posted in response to a May Money and Markets column I wrote here. And if you have additional ones to share, by all means go to our comment section and add them to the discussion.
|OTHER DEVELOPMENTS OF THE DAY|
The Labor Department’s latest “JOLTS” report adds to evidence the job market is improving. It showed 4.6 million job openings in the month of May, the most in seven years.
Roughly 2.5 million Americans quit their jobs, continuing a pattern of steady increases for the past several quarters. That’s actually good news from an economist’s perspective. The reason? It shows workers are confident enough in their ability to find new jobs that they’re less afraid to quit their lousy old jobs and start hunting for something better.
Is there a bubble in everything? That’s what the New York Times looks at in this piece. They are many, many days late and too many dollars short to count, frankly. I’ve been warning about irrational asset valuation in several things (cough, bonds, cough) for more than a year now.
Speaking of the massive bond bubble, you have to love this Bloomberg story titled “Complacency breeds $2 trillion of junk as sewage funded.”
It tells how the president of Ecuador may call his creditors “true monsters” … but he had no trouble getting them to pony up $2 billion for his bonds at sky-high prices and rock-bottom yields. And the home county of Orlando, Florida had no trouble selling $64 million in unrated bonds to fund a venture that will turn human waste and sewage into fertilizer. Talk about a “crappy” deal! Har-har.
Oh look, another couple of mega-banks are facing mega-penalties for various violations. This time the focus is reportedly on Commerzbank and Deutsche Bank (Weiss Ratings: DB, C-) of Germany, and the fines could foot to $500 million or more. When does it end?
Reminder: You can let me know what you think by putting your comments here.
Until next time,