Healthcare Costs Accelerate Slightly

The average per capita cost of healthcare services covered by commercial insurance and Medicare grew 5.71% over the 12 months ending in July 2011, representing a third 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. Since then, the rate of growth accelerated slightly in May, June, and July. Healthcare costs easily outpaced the 3.8% growth in overall inflation as measured by the Consumer Price Index for the same 12-month period ending in July, Bureau of Labor Statistics data show.

A further breakdown of the S&P data show that for the year ending July 2011, healthcare costs covered by commercial insurance increased by 7.72%, as measured by the S&P Healthcare Economic Commercial Index. During the same period, Medicare claim costs rose at an annual rate of 2.35%, 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.

"Continuing the general trend witnessed since April, July saw some modest acceleration in the annual growth rates in commercial healthcare costs, while there was modest deceleration in Medicare costs" David M. Blitzer, chairman of the Index Committee at S&P Indices, said in the report.

The S&P Healthcare Economic Indices estimate the per capita change in revenues accrued each month by hospital and professional services facilities for services provided to patients covered under traditional Medicare and commercial health insurance programs. The annual growth rates are determined by calculating a percent change of the 12-month moving averages of the monthly index levels versus the same month of the prior year, S&P said.
The Hospital and Professional Services Indices reported increases of 5.34% and 5%, respectively, from their July 2010 levels, S&P said.