Uwe Reinhardt has an excellent Economix column today which includes data from a recent survey of health care costs. The nice thing about the data is that it includes both premiums as well as out-of-pocket expenses, giving a fuller picture of total costs. It shows quite clearly that medical costs have risen at more than double the rate of wages. Anyway, the chart and a quote:
The estimated average cost of health spending from all sources for a typical privately insured American family more than doubled in the last decade, to $19,393 in 2011 from $8,414 in 2001. Over the decade, the index exhibited an average compound annual growth rate — widely known in the trade as C.A.G.R. — of 8.8 percent, although, in recent years, that rate has ranged between 7 and 8 percent.Despite that recent abatement, the growth rate is still more than twice the rate at which total average employee compensation has grown, for all but the top executives among private employers. In recent years, the growth in employee compensation has hovered beneath 3 percent.
The obvious next question is how much of this went into profits. Apparently, pretty much all of it:
Profits for the 10 largest U.S. insurance companies jumped 250% between 2000 and 2009 while millions of Americans have lost coverage, according to a report released Thursday by the U.S. Department of Health and Human Services. The report found that the five biggest insurance companies — WellPoint (WLP), Cigna (CI), UnitedHealth Group (UNH), Aetna (AET) and Humana (HUM) — saw their profits increase 56% in 2009, a year in which 2.7 million people lost their private coverage.What’s more, the report found that the companies combined earned a total of $12.2 billion last year. And lest we forget, on the executive compensation, CEOs of the top five received $24 million on average in 2008, the report said.