S&P: Healthcare Costs Growth Slowing

Jeff Elliott, for HealthLeaders Media, December 20, 2010

Continuing the recent trend of slower growth, average per capita healthcare costs rose 6.07% during the 12 months ending in October 2010, according to a research report issued by Standard & Poor's (S&P) Indices. This was a significant deceleration from a yearly peak of 8.40% recorded in the 12 months ending in May 2010.

"The annual growth rate of Medicare and commercial insurance costs has slowed significantly in the last five months and substantially dropped in the month of October," according David Blitzer, chairman of the S&P Index Committee. "The slowing growth appears to be both how the usage of medical care and overall inflation factors into the current economy."

Blitzer also noted the particularly "large and growing difference between commercial and Medicare growth rates." With a 4.18% rise during the year ending in Oct. 2010, Medicare claim costs recorded their lowest annual growth rate since January 2008, when it was 4.02%. This was nearly half the growth rate for claim costs associated with commercial health plans, which rose 8.21% during the same period, though it comes as no surprise to Blitzer.

"The general pattern that Medicare costs rise more slowly than commercial is well established," he said. "One factor is shifting costs from Medicare where fees are set by the government to other consumers of healthcare. However, there is not clear evidence on the importance of this factor compared to others including the size and makeup of the different patient populations."

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