This was an important week for folks in Massachusetts planning their budgets. A big health insurance company settled its premium dispute with regulators. The result will be an 8-15 percent increase in costs compared to the previous year (source). The Boston Globe reports that insurers covering 7 percent of the market are still holding out for permission to charge higher prices.
I can’t figure out how this dovetails with the official inflation numbers. Health insurance is a big component of spending and these kinds of increases would seemingly guarantee an unsettling overall inflation number. Yet supposedly enough other stuff is getting cheaper that we’re at risk of deflation?
14% increase on my employer-sponsored HI for this coming year. Illinois resident.
Our company is pretty young age-wise, but our premiums have jumped at least 10% a year for the past 3 years.
Official inflation numbers are rigged and have been laughed off by economics nerds for years.
http://bigpicture.typepad.com/comments/2007/09/bloomberg-cpi-i.html
http://nowandfutures.com/cpi_lie.html
Or just google “CPI is a lie” or “CPI hedonics ‘equivalent rent'” and you’ll get an eyeful.
1. House prices are excluded in favor of an “equivalent rent” number that helped keep the CPI low during the biggest housing bubble in the history of the world.
2. When inflation is clearly out of control (e.g. the summer of 2005), the Fed starts talking about the “core CPI”, which excludes food and gas costs, because, after all, no one needs those. This is called the “Starving Pedestrians” index.
3. “Hedonic” adjustments are used to pretend that things are cheaper than they really are because their quality is improving. If I could buy, say, a 1 GHz computer with 256 MB of RAM and a CRT ten years ago for $1000, and today the same $1000 buys me a 3 GHz computer with 6 GB of RAM and an LCD, then it didn’t “really” cost me $1000, it was more like $300.
I’d go on, but 24 hours a day isn’t enough for me to keep up with all the lies.