In July 2004, in its ongoing effort to expand coverage of the service sector in the Producer Price Index (PPI), the Bureau of Labor Statistics (BLS) introduced a new price index for the direct health and medical insurance carriers industry. This index, NAICS 524114--Direct Health and Medical Insurance Carriers, appears in table 5 of this publication and is available online via the BLS homepage: www.bls.gov. Data are available for December 2002 to present; prior to December 2003, the index is published as discontinued series SIC 6325.

The primary output of this industry is the contractual transfer of the risk for payment of medical costs and financial intermediation. The policy underwritten by the insurer represents a unique output. The policy lists the conditions for which restitution would be made to the policyholder to cover medical costs. The amount of risk being transferred to the insurer is clearly stated in terms of covered benefits (and benefits not covered), and it obligates the insurer to pay claims for all such occurrences. The indexes for this industry measure the change in the total premium (employee and employer contribution) paid to the insurer plus the return on the invested portion of the premium.