Crypto News: What's behind health-care premium spikes

Hi, it's John in New York. Millions of US workers should prepare for sticker shock over how much more they'll pay for health care next year. More below, but first ...

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A recent survey of large US employers found health-care costs rising at the fastest pace in a decade, an 8% increase for 2025. For small employers, it may be even worse: Data from the investment bank Stephens shows a 12% jump.

The relentless rise of health-care costs erodes workers' earnings and kills jobs. Yet the fact that expenses will go up faster than inflation year after year is barely questioned anymore. It's considered less of a problem that the US can address than a law of nature the nation must accommodate.

Of course it's not. It's the result of a set of choices all the actors in the marketplace make. And that starts with the prices that health insurance companies agree to pay hospital systems and health-care providers. Those prices often defy logic.

That's become harder to ignore as new federal rules have forced some disclosure of previously secret health-care prices. Hospitals' cash prices were the same or less than their median negotiated rates with major insurers about half the time, according to an analysis published last year in Health Affairs.

In other words, the prices negotiated by some of the largest insurance companies in the country — which represent tens of millions of insured lives — are frequently higher than what someone coming in off the street with no insurance would pay.

From hospital to hospital, prices for the same service vary wildly, with no relation to quality, researchers have found. In Monterey County, California, local employers and unions have long decried the prices charged by the local hospitals.

Last week, officials from a California state board monitoring health-care costs held a hearing there. Data presented there showed California had the third-highest health-care prices of any state in the US.

Because health-care services are local, even having the buying power of a big employer doesn't necessarily create the leverage to drive down prices. Take the California Public Employees' Retirement System, which spends about $11 billion a year on health benefits for 1.5 million members — state and local employees and their families.

Yet Calpers paid higher prices for health care overall in Monterey than in higher-cost areas of the state like Los Angeles and San Diego, officials said at the presentation last week. The cost to deliver a baby was almost twice as high in Monterey as the statewide average.

Calper' overall premiums are going up by 11% next year. That's on top of an 11% increase this year. It likely won't be the last. — John Tozzi

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Health questions? Have a tip that we should investigate? Contact us at AskPrognosis@bloomberg.net.

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