News in brief - Aug. 29, 2011

Health Net data loss worse than thought

California-based health plan Health Net is expanding its offer of free credit to more people after discovering that a data security breach it reported in March was worse than originally thought.

The company's information technology contractor, IBM, lost servers from Health Net's Rancho Cordova, Calif., offices. Connecticut and California regulators already were investigating the incident because it appeared to have been months between when it was discovered and when it was disclosed.

The California Dept. of Managed Health Care said in March that 1.9 million current and former subscribers were affected by the breach.

Health Net spokesman Brad Kieffer said in a statement Aug. 15 that through its own investigation, the company recently discovered that some of the member information included Social Security numbers, and that some people whose information was compromised were never notified. The company has extended the deadline for affected members to sign up for two years of free credit monitoring.

He did not say how many additional people are believed to be affected.

"To date, Health Net has no indication that any of the information on the unaccounted-for server drives has been used to commit identify theft, and we continue monitoring the situation closely," Kieffer said.

Back to top

Medical inflation stabilizes

Overall inflation grew by 0.5% in July after a dip of 0.2% in June and growth of only 0.2% in May, while increases in the cost of medical care held steady, according to the monthly consumer price index report released Aug. 18 by the Bureau of Labor Statistics.

The cost of medical care grew 0.2% in May, June and July. Expenses related to professional health services, a category that includes the work of physicians, grew by 0.2% in June and July but not at all in May.

Hospital costs, the component of medical inflation that has tended to grow the fastest, slowed during the past few months. Growth in the cost of hospital services increased 0.4% in July but 0.5% in June and 0.7% in May.

Inflation in the economy as a whole for the past year was 3.6%, much of it driven by growth in the cost of gasoline and food. Medical care costs grew by 3.2% during the last 12 months, although professional services increased by only 2.2%. The annual inflation rate for hospital charges, despite the recent dip, was 6.2%.

Back to top