U.S. Healthcare Costs Climb 5.73% Over 12 Months

John Commins, October 24, 2011

The average per capita cost of healthcare services covered by commercial insurance and Medicare grew 5.73% over the 12 months ending in August, representing a fourth 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 2011. Since then, the rate of growth accelerated slightly each month. 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 August, Bureau of Labor Statistics data show.

A further breakdown of the S&P data show that for the year ending August 2011, healthcare costs covered by commercial insurance increased by 7.89%, as measured by the S&P Healthcare Economic Commercial Index.

During the same period, Medicare claim costs rose at an annual rate of 2.16%, as measured by the S&P Healthcare Economic Medicare Index. This was the lowest annual growth rate recorded for the Medicare Index in its six-year history. The Medicare index reported its highest annual growth rate of +8.02% in November, 2009, but has consistently and sharply decelerated by about 5.86 percentage points since then, S&P said.

"As the summer of 2011 ended, we continued to observe the recent trend of a deceleration in the annual growth rates of Medicare costs and a sustained acceleration in the annual rates of commercial healthcare costs," David M. Blitzer, chairman of the Index Committee at S&P Indices, said in the report. "With this month's data, the Medicare index is almost one-fourth of its peak annual rate of +8.02% recorded in November 2009. This is a very sharp deceleration."

John Commins

John Commins is a senior editor at HealthLeaders Media.

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