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US Healthcare Costs Grew 5.28% in 2011

John Commins, for HealthLeaders Media, February 22, 2012

The average per capita cost of healthcare services covered by Medicare programs and commercial insurance grew by 5.28 % in 2011, nearly double the rate of inflation in the larger economy, Standard & Poor's Healthcare Economic Indices show.

A further breakdown of S&P data shows that healthcare costs covered by commercial insurance plans grew by 7.11% in 2011, while Medicare claim costs rose by 2.51%, despite the government plans' older and sicker population.

Healthcare costs easily outpaced the 3% growth in overall inflation as measured by the Consumer Price Index for 2011, according to Bureau of Labor Statistics data.

Robert Zirkelbach, a spokesman for America's Health Insurance Plans, told HealthLeaders Media that commercial plans must contend with cost-shifting and other market forces that do not affect Medicare. He says the cost growth acceleration also could be link to the recovering economy.

"When the acceleration slowed in the last couple of years, a lot of it had to do with the slowdown in the economy," Zirkelbach said. "People were using fewer healthcare services. That also resulted in changes in the risk pool, where younger and healthier workers chose to forego coverage, or when employers were laying off employees it was often the younger workers that tended to be the first to go. So that resulted in a risk pool that tended to be older and have higher healthcare costs."

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1 comments on "US Healthcare Costs Grew 5.28% in 2011"


Jackie Larson - Avantas (2/22/2012 at 12:21 PM)
A lot of interesting facts and figures presented here. What is not mentioned however are the causes behind the rising costs: Labor. According to the AHA's 2011 Cost of Caring report, "the majority of spending on hospital services goes to caregivers and other hospital workers, and these costs are rising." William Bertschinger, divisional chairman of finance at the Mayo Clinic, at a speech given in January, 2010, at the Symposium on Payment Solutions for Healthcare Providers and Payers in Las Vegas noted that labor accounts for 70 percent of healthcare costs passed along to consumers. Without question, the area that can have the single greatest impact on the rising costs of healthcare is labor. We find that most hospitals can experience labor savings of 3-6% and often greater by implementing some very basic workforce management methodologies and practices. On this scale, the possible savings per hospital is incredibly substantial. On the unit level, this amounts to roughly $100K per unit, per year.