I've Been Gouged

We got a letter from our insurance company telling us that they were going to raise our rates because we were renewing our policy. We were a bit surprised to find that our policy was increasing by over $100 (over 30%). That smells foul to me, so we called them up to see what the deal was.

After being on hold for about 20 minutes, I finally got through and talked with this young woman (who put me on hold for about ten minutes after I asked her why my rates had gone up) who informed me that my rates went up because I was renewing my enrollment on the plan. But the main reason for the increase, according to this woman, is the rising cost of health care. She went through a list of things like perscription medications, doctors visits, and medical tests that increased over the past year.

After a quick Google search and selecting the first item about health care costs in 2011, I came up with this article from CNN stating that health care was expected to rise 9% in the next year. I get the fact that things increase in cost. I don't get the fact that there is over 20% of that cost that has nothing to do with the increasing costs of health care.

This is why I don't like dealing with insurance. You pay a premium religiously every month, and when you really need it, they fight you all the way to pay for what you contracted them to pay for. The lack of transparency is appalling. I tried to go find the financial report (which is more like a marketing brochure) from our company's web site from 2010 to get a rough estimate on what they might have made over the course of the last year. The report for 2010 was not available, so I went with the 2009 numbers instead. I guess the public isn't allowed to see their profits though. Here were a few interesting graphics which were side by side in the 2009 Annual Report:

2009 membership numbers

2009 total reserves

Membership increased by 22,066 people. This is a about a 4 % increase. Total reserves (which I interpret as profits because they won't give me a bottom line if I'm not a share holder) increased 99.1 million. That is a 27% increase. This tells me that someone is making a substantial profit with at least a 23% markup (assuming that the membership and profits are correlated in a linear fashion). Now I'm no math whiz, but I can see that someone is making a quick buck on me. Actually, in my case, they are making about 60 quick bucks on me in 2010, and in 2011 (assuming that everything stays equal which is probably not the case as the Total Reserves chart looks more like an exponential function rather than a linear one) they will be making about 85 quick bucks on me. And this doesn't even cover the markup that is already inherent in the current figures.

I understand that businesses need to make money in order to survive. I also understand that if you bleed everyone dry, they won't have the funds to pay for your services. I also have a sneaking suspicion that the people who are on the right end of the graph on this page are the ones who are increasing my rates an additional 23% because they didn't get the opportunity to go on a week-long paid vacation with each of their friends this past year because they had to tighten their belt.