Healthcare costs continue to rise, but at a declining rate, according to a report by the S&P Healthcare Economic Commercial Index. The cost of healthcare services covered by commercial insurance and Medicare programs increased 5.77% in 2011. David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s said, “If you look over the last year or so of data, it is apparent that the rates of increase in healthcare costs continue to slow down.” Blitzer said that most of the annual growth rates peaked in the late winter/early spring of 2010. Since then, most of these rates have fallen by two percentage points or more.
The biggest slowdown has come from the Hospital Medicare Index, where the annual growth rate fell from 8.30% in August 2009 to 1.18% in March 2011. “On the other hand, we have not seen an equal trend for the Hospital Commercial Index where the annual growth rate peaked at 9.36% in May 2010 and is still reporting a healthy 8.36% as of March 2011,” he said. Blitzer said that two things may explain this phenomenon: costs for Medicare patients are being better contained than costs for patients with commercial insurance plans. Also, hospitals are using more procedures and services covered under commercial plans, contributing to the increase in total costs.
The index is virtually back to the lowest annual growth rate in its six-year history, which was 5.76% in June 2007. The highest annual growth rate was during the 12-months ending May 2010, when it posted 8.74%. In the following 10 months, the index had a sharp deceleration, down 2.97%. Over the year ending March 2011, healthcare costs covered by commercial insurance rose by 7.57%. Medicare claim costs rose 2.78%, which is the lowest annual rate of growth posted for the Medicare Index in its six-year history.
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