Growth chart with coins Theconsumer price index for medical care services in April rose 2.3percent, while overall inflation increased 2 percent YOY. (Image:Shutterstock)

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If it seems as if health insurance is going up faster in cost,that's because it is. The inflation rate for health insurance hit afive-year high in April. It could be due to the rise in managedcare, but also could owe some of the rise to a decrease in medical-loss ratios.

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Modern Healthcare reports that although the other categorieswithin the medical care services index, professional services andhospital and related services, rose just 0.4 percent and 1.4percent, respectively, in April, the Consumer Price Index for health insurance jumped 10.7percent over last year. That's the largest increase since at leastApril 2014, according to a Modern Healthcare analysis of the U.S.Bureau of Labor Statistics' unadjusted monthly Consumer Price Indexdata.

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Related: Consumers expect big increases in college andhealth care costs

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Meanwhile, the CPI for medical care services in April rose 2.3percent, while overall inflation increased 2 percent YOY. As notedby Modern Healthcare, however, the increase in price isn't areflection of premiums paid but ”retainedearnings,” or what is left after claims are paid to coveradministrative costs or profits.

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Paul Hughes-Cromwick, an economist at Altarum, says that theprobable cause of the rise in health insurance is the growth inmanaged care, including Medicare Advantage,Medicaid managed care and commercial insurance. Hughes-Cromwickalso pointed to the rise in premiums exceeding the rise in claimspayouts added to the inflation increase.

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While the medical loss ratio indicates the percentage of everypremium dollar spent on medical claims and quality improvement, andunder the Affordable Care Act insurers have to devote at least 80percent of premiums to them or provide rebates to plan members, ACAexchange insurers in the individual market boosted premiums beyondwhat was necessary last year.

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Now they're in the position of having to send out some $800million in rebates, according to a Kaiser Family Foundationanalysis, and insurers in the individual, small group and largegroup markets will be on the hook for a total of $1.4 billion inrebates based on their 2018 performance—thanks to declining medicalloss ratios.

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The eight largest publicly traded insurers posting net income of$9.3 billion in the first quarter of 2019.

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Marlene Satter

Marlene Y. Satter has worked in and written about the financial industry for decades.