S&P: US Healthcare Costs Up 6%, But Growth Slowing

John Commins, January 21, 2011

The average per capita cost of healthcare services covered by commercial health plans and Medicare programs rose 6.27% in the 12 months ending in November 2010, but the rate of growth continues to decelerate, Standard & Poor's said Thursday.

The S&P Healthcare Economic Indices monthly estimate for November showed that medical inflation slowed 0.41% when compared with the 6.68% growth reported for the 12-month period ending in October 2010 – a deceleration trend that's been in place since May, said David M. Blitzer, chairman of the Index Committee at Standard & Poor's. "We are continuing to see a downward trend in the annual growth rates across all indices," Blitzer said. 

Healthcare cost increases continue well above the rate of inflation in the larger economy, which grew 1.1% for the 12-month period ending in November as measured by the Consumer Price Index. Most of that growth was fueled by energy costs, the Bureau of Labor Statistics reports.

Blitzer speculated that some of the reduced rate of growth in healthcare costs may be attributed to the recession and the slow recovery. "People are being tight with their money and that includes spending on healthcare," he said. "Some healthcare is discretionary, some is not. Some is sort of adjustable in that you may be able to resolve the problem cheaper but not as effectively."

Although the growth in the rate of healthcare costs has slowed since May, Blitzer said that's not necessarily a permanent trend.

"It's encouraging but I don't think it's earth shattering. We see movements every month and the 12 month changes go up and down," he said. "There is nothing in this report that says that healthcare costs are only going to go up with the rate of inflation. Healthcare continues to account for more and more of the economy. It'd be nice if we could stabilize that and spend the money for other things."


John Commins

John Commins is a senior editor at HealthLeaders Media.

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