Health Care Spending Rose 5.7% Last Year

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But health insurance premiums? They rose 10%, 15%, even 39%. So where is the money going?

Anthem Blue Cross, the insurer widely criticized for raising premiums on some individual policy holders by 39%, says its rate hikes are “fair, legal and necessary,” according to the LA Times.

Now, the LA Times’ David Lazarus explores the fact that it’s not just the individual policy holder market affected by exorbitant rate hikes. Small businesses—and their employees, obviously—are also being hit hard with rate increases between 10% and 30%.

One video production company cited in the story used to pay all of the premiums for its employees. Now, after rates doubled in a few years, the business pays half of its staffer’s premiums—and it looks like that down the line, it’ll cover only 40%, maybe even 25% of those bills.

From the story:

Paula Wilson, a Temecula insurance broker, said rates charged to her small-group clients have increased about 15% on average. “I’ve got seven renewals on my desk right now,” she said. “The average rate increase is 12.7%.”

Such double-digit increases are particularly striking in light of the fact that healthcare spending rose 5.7% last year, according to the latest government figures. The cost of insurance is far outpacing the overall cost of healthcare, which is itself outpacing the rate of inflation (2.7% last year).

The rate hikes aren’t limited to individual policies or small businesses—or even to just California. The AP got a lot of attention for its story about how at least four states are seeing huge premium increases for folks who don’t get their insurance (or most of it anyway) via work. Starting this summer, for example, a family of four in Maine can expect that their annual health insurance tab to be $22,500.

That’s just about half the median household income in Maine, $45,832 (2007).