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Healthcare Costs Accelerate Slightly

John Commins, for HealthLeaders Media, September 16, 2011

"Six of the nine headline indices saw accelerations in annual growth rates – the exceptions being the three related to Medicare," Blitzer said. "The Professional Services Medicare and Hospital Medicare Indices saw their annual rates decelerate to +4.15% and +.94%, respectively. For the Hospital Medicare index, this rate is only .01 percentage points above its April 2011 record low. At +5.90% and +5.34%, the Professional Services and Hospital Indices annual rates were above their June readings. Likewise, the Professional Services Commercial Index and Hospital Commercial Index also saw accelerating annual rates of +6.64% and +8.78%, respectively."

The highest annual growth rate for the S&P Composite index in the past six years was during the 12 months ending May 2010, when it posted +8.74%.

Blitzer said the index reflects changes in healthcare costs, not just changes in healthcare prices. "While commercial costs are increasing at faster rates than Medicare, it could be attributed to a number of factors – changes in utilization, new services and technology, changes in benefits coverage, and contractual reimbursement provisions, in addition to changes in prices," he said. "Medicare is a single provider, whereas private insurers face competitive pressure and are likely to negotiate with healthcare providers to be the insurer of choice to businesses and consumers."

John Commins is a senior editor with HealthLeaders Media.