Slight deceleration in healthcare costs
By jeremy.engdahl-johnson
The S&P Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.13% over the 12 months ending November 2011. This is a decline from the +5.29% annual growth rate posted for October 2011.
As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans increased by 6.96% over the year ending November 2011, down from the +7.10% reported for October. Growth rates in Medicare claim costs rose by 2.37%, as measured by the S&P Healthcare Economic Medicare Index, down from the 2.55% reported for October. The S&P Healthcare Economic Professional Services Medicare Index also dropped from +4.15% in the year ending October 2011 to +3.62% in November. The S&P Healthcare Economic Hospital Medicare Index increased slightly to +1.33% in November from its +1.28% October value.
The Hospital and Professional Services Indices annual growth rates also posted decreases from their October 2011 rates; they increased 5.05% and 4.97%, respectively, from their November 2010 levels. These are below the +5.14% and +5.21% respective annual rates posted in October 2011.
“After seeing a few months of increasing annual growth rates, particularly across commercial insurance plans, November’s data presented us with some moderation in health care costs,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “In November, the Composite Index posted an annual rate of +5.13%, the Commercial Index +6.96% and the Medicare Index +2.37%. All three were down from October’s annual growth rates.
“November’s moderation in healthcare costs was more attributable to Professional Service practices than to Hospitals. The Professional Services Index’s annual rate of change fell from +5.21% in October to +4.97% in November. Looking more closely at the Professional Services Indices, you can see that most of the change was driven by further declines in growth rates in costs covered by Medicare insurance plans, which has been the trend over the past year.
“With the exception of the Hospital Medicare Index, all the Indices saw decreases in their annual growth rates in November 2011. The highest decrease, 0.53 percentage points, was in the Professional Services Medicare Index. The only increase, 0.05 percentage points, was in the Hospital Medicare Index. As we near the end of 2011, the main characteristic in healthcare costs was a trend toward increasing annual rates in the latter half of the year, after a prior 12 month’s general trend of deceleration. This was particularly true for costs covered by commercial plans; whereas costs covered by Medicare have been averaging about 2.5% over those same 18 months.”
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