Healthcare Costs Growth Rate Spiking Upward

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imageThe average per capita cost of healthcare services covered by commercial insurance and Medicare programs is on an upward trend, rising by 6.29% over the year ending in January, according to Standard & Poor’s S&P Healthcare Economic Composite Index. The increase marks the first time the growth rate has accelerated since May 2010. Meanwhile, the S&P Healthcare Economic Indices, which also incorporate commercial and Medicare indices, estimate the per capita change in revenues accrued each month by hospital and professional services facilities for services provided to patients covered by Medicare and commercial health insurance programs. According to the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance for the year ended in January saw an 8.03% increase; the S&P Healthcare Economic Medicare Index, a 3.4% increase in Medicare claims costs for hospital and professional services. "In January, we saw the annual growth rates in healthcare costs picking up slightly after six consecutive months of decelerating rates in the latter half of 2010," notes David M. Blitzer, chairman of the index committee at Standard & Poor's. “The annual growth rates for these headline indices – Composite, Commercial and Medicare – are up 0.24, 0.31, and 0.13 percentage points from their respective December 2010 rates. If you look at all of the sub-indices in this family, only the Hospital Medicare Index reached a new low, +1.72 percent in January 2011 versus the same month in 2010." Blitzer notes that the past year has also wrought a trend of deceleration in annual growth rates for the nine indices in this family, especially in the second half of 2010. The first month of 2011 showed a departure from this pattern, he states, adding that it is still too soon to predict if this is an anomaly or, alternatively, “a sign of what 2011 has in store for us”. Moreover, he states, “the S&P Healthcare Economic Hospital and Professional Services Indices annual growth rates were +5.64% and +6.76% for January 2011, respectively, versus December 2010 prints of +5.56 % and +6.34%." Additionally, according to the indices, the rate of change in expenditures associated with commercial health insurance plans continues to outpace expenditures for Medicare. The only other juncture at which this relationship was reversed was a brief period in late 2005. In the past year alone, the gap has widened by more than three percentage points.