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Cost-Shifting Blamed for Commercial Insurance Cost Growth

John Commins, for HealthLeaders Media, November 18, 2011

September's annual growth rate for Medicare was the lowest in the six-year history of the index. The Medicare index reported its highest annual growth rate of 8.3% in August 2009, but has consistently and sharply decelerated since then, S&P says.

Zirkelbach says provider consolidations also play a role in rising costs for commercial plans. "Our members are getting rate increase requests from providers by as much as 60% and 70% in some markets across the country," he says. "There is a growing body of evidence and research showing that as hospitals consolidate, that leads to higher prices for services. In some markets there is only one 'must-have' hospital in a region that is able to charge significantly more for services, often 200%, 300%, 400% of what Medicare pays for the same services, and that is having a direct impact on the cost of care."   

Overall, the average per capita cost of all healthcare services covered by commercial plans and Medicare grew 5.75% over the 12 months ending in September, representing the fifth straight month of modest cost growth acceleration, the indices show. 

In April, the index for all healthcare services posted the lowest annual growth rate in its six-year history, 5.37%. Since then, the rate of growth has accelerated slightly each month. Another set of S&P trackers, the Hospital and Professional Services Indices, posted increases of 5.51% and 5.78%, respectively, from their September 2010 levels.

Healthcare costs easily outpaced the 3.9% growth in overall inflation as measured by the Consumer Price Index for the same 12-month period, Bureau of Labor Statistics data show.

The S&P Healthcare Economic Indices estimate the per capita change in revenues accrued each month by hospital and professional services facilities for services provided to patients covered under traditional Medicare and commercial health insurance programs.

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