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Healthcare Cost Growth Accelerates Slightly

John Commins, for HealthLeaders Media, August 19, 2011

The average per capita cost of healthcare services covered by commercial insurance and Medicare grew 5.61% over the 12 months ending in June 2011, representing a second straight month of modest acceleration of cost growth, Standard & Poor's Healthcare Economic Indices show.

The index posted its lowest annual growth rate in its six-year history -- +5.37% in April 2011. Since then, the rate of growth accelerated slightly in May and June. Healthcare costs easily outpaced the 3.6% growth in overall inflation as measured by the Consumer Price Index for the same 12-month period ending in June, Bureau of Labor Statistics data show.

Cost reduction is among the top three priorities of healthcare organizations, the HealthLeaders Media Industry Survey 2011 shows.

"Although rates have been slightly up in most indices over the past two months, the overall story continues to be moderation in trends over the past 12-15 months," David Blitzer, chairman of the Index Committee at Standard & Poor's, said in the report. "As noted in prior reports, some market participants are reporting relatively low trends in office visits and hospital admissions, as well as steps being taken to address healthcare reform and control costs. If true, these could be contributing to these lower trends."

A further breakdown of the S&P data show that for the year ending June 2011, healthcare costs covered by commercial insurance increased by 7.48%, as measured by the S&P Healthcare Economic Commercial Index. During the same period, Medicare claim costs rose at an annual rate of 2.5%, as measured by the S&P Healthcare Economic Medicare Index. This was the lowest annual growth rate recorded for the Medicare Index in its history, which goes back to January 2005, S&P said.