Have you heard the great news about inflation falling? The Biden administration is heavily promoting the inflation is low again storyline, and trying to insinuate the falling rate means prices are actually decreasing. The obedient regime media is playing along.
Anyone buying groceries, utilities, insurance, etc. knows prices continue to rise dramatically. So how does the government come up with its bogus inflation rate? There are undoubtedly many more like this but here is just one outrageous example:
Per the October Consumer Price Index ("CPI") report released by the Bureau of Labor Statistics, the cost of premiums paid for Health Care Insurance decreased by 34% from October 2022 to October 2023. That is obviously preposterous.
This same report gives us guidance about 'Changes to Health Insurance Methodology.' The BLS has decided to "smooth" the methodology of calculating changes in the cost of Health Care premiums used in their inflation reports effective with this October 2023 report. There was apparently a lot of negative "smoothing."
The report also reveals the BLS does not even measure the actual cost of health care premiums paid to insurance companies. Instead, the base is "retained earnings" which, as defined by the BLS for calculating its impact on inflation, is effectively "Health care premiums collected by insurance companies minus benefits paid out."
This is akin to measuring inflation on goods and services by tracking gross profit as prices rise, rather than tracking how much a consumer actually pays. A simplified example would be that Bob's health insurance costs $10,000 per year and benefits paid out totaled $9,000. Thus the "retained earnings" on Bob was $1,000.
Let's say that Bob's benefits payout increases by $500, from $9,000 to $9,500. At the same time, his insurance premium is also increased by $500, from $10,000 to $10,500. Bob's premium just increased by 5%, but according to the BLS, there is no inflation here because the insurance company's retained earnings remained static at $1,000.
For the BLS to show negative inflation for health insurance means retained earnings are declining. If so, it is not because premiums are decreasing, rather it is due to the costs of benefits paid out increasing faster than premiums, which means premiums will have to go up to maintain the margin that allows for salaries and expenses to be paid.
In other words, not only is a decrease in health insurance companies' "retained earnings" not deflationary, it is actually inflationary. A 34% cost decrease in health insurance premiums sticks out as obviously flawed, but how many other erroneous inputs that are less egregious are also distorting the official published inflation rate?
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