The "Trend"

[longfisher]

In health insurance, the "trend" refers to the seemingly unstoppable increase in what providers (hospitals, doctors, clinics, imaging centers, etc.) charge for their services. The heath insurance companies regularly blame the "trend" for their need to raise premiums.

In the past, there was good reason to believe them, although insurance premium increases often outpaced increases in the trend. That's no longer true.

Nationwide and for the first time in 20 years the trend has reversed itself. In the first three quarters of 2010 the trend went negative by 1.6%. Moreover, estimates have it that when all the numbers for 2010 are compiled the trend may have reversed itself by as much a 3%, i.e., the cost of medical care in the United States has been reduced by 3% in 2010.

So, an objective observer would be inclined to see the heatlh insurance rates decline too, right? Or, in the worst case the health insurance rates would be expected to remain steady, right?

Well, I'm here to tell you that at least in Texas that's not going to happen. Each of my insurers is projecting an increase in premium rates for "new business" of about 3% as of April 1st, the beginning of the second quarter. And, rates here increased on average about 2.5% for the 1st quarter of 2010.

At the same time, insurance industry profits have absolutely never been higher. The industry pocketed billions in 2010 and is projected to do even better in 2011.

I guess we know now that we can't trust what the insurance companies tell us about why their rates seem so implacably to rise each quarter and we can see where our premium dollars for increases are going...directly into their bank account.

As an aside, this reduction in the trend was unexpected. It's so unusual that one must ask what the Devil happened in 2010 to make it so. Although there are several potential contributors to a reduction in the trend one of them is that the Obama Administration cut a deal with big-pharma and the hospitals to reduce their charges by many billions of dollars over the next 10 years.

Obama cut this deal, ostensibly, to keep the money of these massive players out of the mix of the health reform debate. I guess he felt he had enough to cope with trying to deal just with the insurers.

Anyway, I don't like backroom deals any more than any of you do. And, I particularly don't like it from a president who as a candidate promised a new era of transparency in government.

But there's a chance that it had a silver lining or two. Firstly, it may have actually played a major role in stemming increases in the trend. Secondly, it may have consequently exposed the hypocracy of the insurance industry in blaming their premium increases anything other than their own greed (a synonym for Wall Street).

LF

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[Big Fish Billy]

I'm liking this trend.........