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S&P: US Healthcare Costs Up 6% in 2010, But Growth Slowing

John Commins, for HealthLeaders Media, February 18, 2011

Healthcare cost increases continue well above the rate of inflation in the larger economy, which grew 1.6% for the 12-month period ending in December as measured by the Consumer Price Index. Most of that growth was fueled by rising food and energy costs, the Bureau of Labor Statistics reports.

Blitzer says some of the reduced rate of growth in healthcare costs may be attributed to the recession and the slow recovery. “What we are seeing and what we are still benefitting from is that until very recently general inflation in the economy was slowing down,” he says. “Looking at trend over the last 12 months we are still benefitting of what has been a deceleration in inflation that goes back to the beginning of the financial crisis. We may also be seeing some moderation in terms of employment trends. Less growth in employment in physicians’ offices and hospitals will slow down expenditure numbers too.”

Whatever the reason, Blitzer says the new healthcare reforms are not a factor. “There is nothing we are seeing that we can either credit or blame on the healthcare reforms. It’s too early in the process,” he says. “While I’m sure one side would love to say costs are rising more slowly because of healthcare reform and the other side would like to say healthcare reform is going to ruin us, we can’t answer that question either way.”

The December S&P indices found that:
  • Claim costs associated with hospital and professional services for patients covered under commercial health plans rose 7.75% over the year ending in December, down from 7.79% for the year ending in November, and 8.19% for the year ending in October, but well above the historical low of +6% annual growth rate posted in September 2005.
  • Medicare claim costs for the same services rose 3.27% over the year ending in December -- the lowest annual growth rate for Medicare claims in the six-year history of the S&P indices. In the year ending November 2010, Medicare claims costs rose 3.74%.
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