US healthcare costs show broad increases in December

S&P Indices today announced the results of its S&P Economic Healthcare Indices for the year ending December 2011. Across the board, healthcare costs as measured by annual rates of change went up in the last month of the year. 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 5.28% over the 12-months ending December 2011. This was an increase from the +4.85% annual growth rate posted for November 2011.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans increased by 7.11% over the year ending December 2011, moving up from the +6.63% reported for November. Growth rates in Medicare claim costs rose by 2.51%, as measured by the S&P Healthcare Economic Medicare Index, up from the 2.15% reported for November. The broad Hospital and Professional Services Indices annual growth rates also posted increases from their November 2011 rates; they increased 4.99% and 5.34%, respectively, from their December 2010 levels. These are above the +4.69% and +4.76% respective annual rates posted in November 2011.

Looking at the narrower sub-indices, the Professional Services Medicare Index rose from its recent low of +3.42% in the year ending November 2011 to +3.72% in December. The Hospital Medicare Index increased to +1.50% in December, from its +1.09% November annual rate. The Professional Services Commercial Index went up to +6.09% in December from +5.38% in November; and the Hospital Commercial Index increased to +7.95% in December from +7.75% in the previous month.

“After November’s deceleration, healthcare costs annual growth rates bounced back in December,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “Since the end of the summer we have generally seen increasing annual growth rates, particularly with healthcare costs covered by commercial plans. Last month’s data, which was through November 2011, showed a modest deceleration; however, December’s data has returned to the accelerated pace and this time it affected all types of healthcare costs.

“In December, the Composite Index posted an annual rate of +5.28%, the Commercial Index +7.11% and the Medicare Index +2.51%. All three were up from their respective November annual growth rates. December’s increase in healthcare costs was also seen in our Professional Services and Hospital indices. But the steepest increase, 0.71 percentage points, was in the Professional Services Commercial Index; while the smallest increase, 0.20 percentage points, was in the Hospital Commercial Index.

“Looking back over the past three years, while there were differences across types of coverage, we generally witnessed the annual rates of change in healthcare costs accelerating from the beginning of 2009 and peaking around May of 2010. For the next year or so, through the first half of 2011 the trends were more towards deceleration, with annual growth rates generally reaching their recent lows in the summer of 2011. Since then, growth rates started to once again accelerate, most notably for hospital costs and those covered by commercial insurance plans. In fact, our Hospital Commercial Index stands out as the one whose annual growth rate, +7.95%, is back to its May 2010 rate. We appear to be entering 2012 witnessing a renewed acceleration in healthcare costs.”

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