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S&P: Healthcare expenditures for commercial plans up 3.2% in the year ending February 2014

Data released today for the S&P Healthcare Claims Indices shows that healthcare costs rose 3.5% in the 12 months ended February 2014 compared to the 4.9% rise for the 12 months ended February 2013. Medical costs—inpatient and outpatient hospitalization plus professional services—rose 3.1% and prescription drugs rose 3.5% over the same period. All but prescription drugs rose at a slower pace than a year earlier.

Among the key components of medical costs, inpatient fee-for-service rose 2.6% compared to 4.3% in the earlier period while outpatient fee-for-service costs rose 4.9% compared to 6.3% in the earlier period. Prescription drugs expenditures were up 3.5% versus 1.5% one year ago. These figures, which represent the most current data available, are based on expenditures incurred in the 12 months ended February 2014.

“With the exception of prescription drugs, healthcare expenditures are growing more slowly than a year ago,” says David Blitzer, Managing Director and Chairman of the Index Committee and S&P Dow Jones Indices. “The overall trends in healthcare costs are lower than that seen a year or two ago, but remain one to two percentage points above the overall rate of inflation. The greater growth in prescription drug costs reflects a combination of higher prices for both generic and branded pharmaceuticals and shifting market shares between generic and branded.

“Among the principal lines of business, expenditures for large and small groups and administrative services only (ASO) plans show stable growth rates. Individual plans, where a participant is not part of a group plan based on employment, are the smallest segment as well as the most volatile. While the growth in costs moved down through 2013, the most recent data suggests a jump in expenditures for this category. Because this is the segment that the will be most affected by Obamacare going forward, it is likely to be closely watched as the new healthcare law is implemented in coming years.

“The rise in total healthcare costs at 3.2% over the 12 months ended with February 2014 is slightly greater than the increase in current dollar GDP from the first quarter of 2013 to the first quarter of 2014 of 2.9%. Moreover, the 2014 first quarter GDP was weakened by unusually severe winter weather and a small decline in consumer spending on health services. With healthcare cost trends moderating, the share of GDP devoted to healthcare may be stabilizing as well.”

S&P: Healthcare expenditures for commercial plans up 3.5% in the 12 months ended November 2013

Data released today for the S&P Healthcare Claims Indices show healthcare costs rose 3.5% in the 12 months ended November 2013 compared to the 4.9% rise for the 12 months ended November 2012. Medical costs—inpatient and outpatient hospitalization plus professional services—rose 3.7% and prescription drugs rose 2.6% over the same period. All rose at a slower pace than a year earlier.

Among the key components of medical costs, inpatient fee-for-service rose 3.5% compared to 4.5% in the earlier period while outpatient fee-for-service costs rose 5.2% compared to 8.0% in the earlier period. Prescription drug expenditures were up 2.6% versus 2.9% one year ago. These figures, which represent the most current data available, are based on expenditures incurred in the 12 months ended November 2013.

Because of standard industry lags in invoicing claims and resolving disputed charges, it is not possible for the indices to be calculated without a lag. Trends in healthcare expenditures are calculated as the average index level in the 12 months ended November 2013 compared to the average index level in the 12 months ended November 2012 and stated as a percentage, in accordance with the usual practice with healthcare cost analyses.

“The growth in healthcare spending continues to slow,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The key question in the slowdown is whether we are seeing a shift in healthcare cost trends that is sustainable or whether we are merely observing the slower pace of overall inflation and weak economic growth. One way to gain some insight is to look at unit cost measures for healthcare derived from the S&P Healthcare Claims Indices.”

“The data show that prescription drug trends tend to lag shifts in inflation while trends in inpatient unit costs don’t show any obvious relation to inflation shifts,” continues Blitzer. “The pattern in prescriptions may reflect consumer preferences towards generic drugs. While the general rate of inflation may affect trends in inpatient medical care, it is probably not the dominant factor. The current low inflation rate is a factor in slowing growth in healthcare expenditures, but low inflation alone will not control the growth in healthcare costs.”

S&P: Healthcare costs rise 3.5% in the year through May 2013

Data released today for the S&P Healthcare Claims Indices show that for the 12-month period through May 2013, medical and prescription drug costs together rose 3.5% as drug costs rose 0.6% and medical costs rose 4.2%. These figures, which represent the most current data available in the healthcare industry, compare the average level of the cost indices in the 12 months ended May 2013 with the average level for the 12 months ended May 2012, the normal industry calculation of trends.

“The S&P Healthcare Claims Indices are based on data on actual expenditures for hospitalization, outpatient services and prescription drugs for Americans covered by commercial health insurance plans,” says David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “These data provide a benchmark for evaluating various healthcare plans including the Affordable Care Act. The Indices are a relevant and transparent benchmark for measuring U.S. healthcare costs providing health insurers, consumers, employers, healthcare provider systems, and other users with the most current data available on the current rising cost of U.S. healthcare.”

“The data released today for the S&P Healthcare Claims Indices confirm that while the rate of increase of medical care expenditures in the U.S. is slowing, it is still rising faster than disposable personal income. Where possible, healthcare expenditures do respond to economic incentives. Comparing branded and generic pharmaceuticals, unit costs—expenditures divided by days of prescription supplied—rose 16.1% for branded versus 3.0% for generic. Utilization of generics rose 9.7% while utilization of branded fell 16.8% in the 12 months ended May 2013.”

Trends for total medical cost, medical cost excluding pharmaceuticals, and pharmaceuticals declined over the period. Two factors that may have contributed to these developments were shifts from inpatient to outpatient treatments as shown by the larger growth in outpatient expenditures. Second, as shown by the data on prescription drugs, there are cost-driven shifts from branded to generic pharmaceuticals.

S&P: Annual growth rates remain stable in July

Data released today by S&P Dow Jones Indices for 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 3.06% over the 12 months ending July 2013, remaining flat at the level recorded in June.

Four of the nine S&P Healthcare Economic Indices showed the same annual growth rates for July 2013 as for June 2013. They were the Composite Index, the Medicare Index, the Commercial Index, and the Hospital Medicare Index. As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans rose by 4.15% in July. Annual growth rates in Medicare costs increased by 1.40% in July, according to the S&P Healthcare Economic Medicare Index. The Hospital Medicare Index’s growth rate recorded 2.29% in July. These indices’ growth rates remain flat from June to July.

SPHealthcare_July_2013_Chart

The Hospital Index’s growth rate posted 2.30% in July, up from 2.10% reported in June. The Hospital Commercial annual growth rate was 2.30% in July, up from 1.94% recorded in June.

The Professional Services Index annual growth rate hit a recent low of 3.70% in July; it was down from 3.93% posted in June. The Professional Services Commercial Index decelerated to 5.77% in July, down from 6.10% reported the previous month. The Professional Services Medicare annual growth rate hit a new low of -0.26% in July, down from -0.23% recorded in June. This is the only index of the nine headline indices that remains in the negative territory.

“Since last summer we saw healthcare cost growth rates dropping and now they are stabilized near recent levels for most of the indices. The indices’ growth rates are among the lowest since the indices’ start date in 2005. Four of the nine headline indices’ annual rates remained flat between June and July,” says David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “The annual growth rate for the S&P Healthcare Composite Index was 3.06%, the annual growth rate for the Commercial Index was 4.15%, and for the Medicare Index was 1.40%.

“The Hospital Index posted a 2.30% annual growth rate in July; it accelerated by 20 basis points since June. The Hospital Medicare Index remained flat at 2.29% since June. The Hospital Commercial Index posted a 2.30% annual rate, accelerating by 36 basis points. It has the highest acceleration among the healthcare indices covered.

“The Professional Services Index annual growth rate hit a recent low of 3.70% in July, 23 basis points down from the month before. The Professional Services Medicare Index growth rate hit a new low of -0.26% in July, three basis point down from June. It has the lowest annual growth rate among our healthcare indices and remains the only negative one. The Professional Services Commercial Index posted a 5.77% rate in July, 33 basis points down from its June value. It remained the highest among the healthcare indices we cover.”

S&P: Annual growth rates increase moderately in June

Data released today by S&P Dow Jones Indices for 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 3.00% over the 12 months ending June 2013, accelerating from the 2.96% annual growth rate recorded in May.

Eight of the nine S&P Healthcare Economic Indices showed higher annual growth rates for June 2013 compared to May 2013. As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans rose by 4.14% in June, up from 4.09% reported in May. Annual growth rates in Medicare costs increased by 1.27% in June, according to the S&P Healthcare Economic Medicare Index, up from a 1.22% rate recorded the previous month.

The Hospital Index’s growth rate posted 2.05% in June, up from 1.97% reported in May. The Hospital Medicare Index recorded a 2.17% annual rate in June, up from 2.09%. The Hospital Commercial annual growth rate posted 1.95% in June, up from 1.85%.

The Professional Services Index annual growth rate was 3.86% in June, marginally up from the 3.85% May value. The Professional Services Commercial Index accelerated to 6.08% in June, up from 6.06%. The Professional Services Medicare annual growth rate hit a new low of -0.39% in June, down from -0.38% recorded in May.

“Following a period when healthcare cost growth rates were dropping, we’re now seeing increases in most of the indices. Even after this month’s figures, the indices growth rates are among the lowest since the indices’ start dates in 2005. Eight of the nine headline indices’ annual rates moderately accelerated in June,” says David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “The annual growth rate for the S&P Healthcare Composite Index was 3.00%, the annual growth rate for the Commercial Index was 4.14%, and for the Medicare Index was 1.27%.

“After 13 months of deceleration, the Hospital Commercial Index accelerated by ten basis points in the annual growth rate. It has the highest acceleration among the healthcare indices covered.

“The Professional Services Medicare Index annual growth rate hit a new low of -0.39% in June, one basis point down from last month. It has the lowest annual growth rate among our healthcare indices and remains the only negative one. The Professional Services Commercial Index posted a 6.08% rate in June, two basis points up from its May rate. It remained the highest among the healthcare indices we cover.”

S&P: Annual growth rates decelerated in May

Data released today by S&P Dow Jones Indices for 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 2.96% over the 12 months ending May 2013, decelerating from the +3.19% annual growth rate recorded in April.

All nine S&P Healthcare Economic Indices showed lower annual growth rates for May 2013 compared to April 2013. As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans rose by 4.34% in May, down from +4.59% reported in April. Annual growth rates in Medicare costs increased by 0.85% in May, according to the S&P Healthcare Economic Medicare Index, down from a +1.07% rate recorded last month.

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