Healthcare Cost Growth Slows but Easily Outpaces Inflation

John Commins, November 20, 2012

The average growth in per capita cost of healthcare services slowed over the past year by nearly 0.7%, but the overall pace of that growth continues to easily outstrip inflation in the larger economy, according to Standard & Poor's Healthcare Economic Indices.

For the 12-month period ending in September, S&P reports that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs rose by 5.06%—a slight deceleration from the 5.7% annual growth rate recorded in August.

Inflation in the overall economy was 2% for the same 12 months, as measured by the Consumer Price Index.

David Blitzer, managing director and chairman of the Index Committee, S&P Dow Jones Indices, says the decelerating healthcare cost growth is likely due to the continuing sluggish economy.

"I don't see specific health-related stuff that is national in scope to have this impact," he says. "It is still too soon for most of the 'Obamacare' stuff coming along. There may be some peculiar shifts because we've changed the age composition of people covered, because we now cover students up to the age of 26. So in some areas there could be some strange effects. The average age of that covered population in commercial insurance comes down and therefore the average health goes up. But at the same time, the kind of injuries is probably going to change, too. Bring the age down and you raise the proportion of young adults who have automobile accidents proportionately ... and you have less chronic illness than you used to. But I don't think any of that is big enough in a macroeconomic scale."

John Commins

John Commins is a senior editor at HealthLeaders Media.


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