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US Healthcare Costs’ Annual Growth Rates Little Changed in March 2012

The S&P Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.68% over the 12-months ending March 2012. This is a modest deceleration from the +5.72% rate posted for February 2012.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans increased by 7.84% over the year ending March 2012, up from +7.69% reported for February 2012. Growth rates in Medicare claim costs rose by 2.41%, down from February’s +2.72%, according to the S&P Healthcare Economic Medicare Index. The Professional Services Index annual growth rate also decreased from its February 2012 rate of +5.68% to March’s +5.58%. The Hospital Index annual growth rate increased marginally to 5.50% in March from its 5.49% February rate.

In March 2012, the Professional Services Medicare Index hit its lowest rate in more than two years, +2.99%.  This is down more than a half a percentage point from February’s +3.55% rate. The Hospital Medicare annual growth rate was also down in March, to +1.80% from its February rate of +1.94%. The Professional Services Commercial Index increased to +6.88% in March from +6.73% in February; and the Hospital Commercial Index accelerated to +8.49% in March from the +8.37% posted for February.

“At a national level, we observed a very moderate deceleration in healthcare costs’ annual growth rates in March,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “After a prior 12 months of broad deceleration, the second half of 2011 was highlighted by a general upward trend in such rates. March’s data indicate that we ended the first quarter of 2012 with this trend more-or-less intact. March’s very modest deceleration in healthcare costs was caused by a deceleration in Medicare costs largely offset by an acceleration in Commercial costs.

“In March, five of the nine indices we publish saw deceleration in their annual growth rates. The Composite Index posted an annual rate of +5.68%, the Commercial Index +7.84% and the Medicare Index +2.41%. The Composite and Medicare rates were down from their respective February 2012 levels by 0.04 and 0.31 percentage points, while the Commercial annual growth rate rose by 0.15 percentage points. The Professional Services Index posted an annual rate of +5.58%, down 0.10 percentage points from its February rate. Hospital’s +5.50% annual rate was up marginally in March.

“The annual growth rate for the Professional Services Medicare Index hit a two-year low of +2.99% in March 2012. This is more than half of a percentage point lower than what was reported for February. While this series has seen some volatility in recent months, there has been a significant decelerating trend over the past 12 months. It is the only one of the nine indices we publish where annual rates are below where they were in March 2011. The Hospital Medicare Index was down by 0.14 percentage points in March 2012 to a +1.80% annual rate, but is above its March 2011 rate.  Annual rates of change in Medicare costs are the lowest among the nine indices we publish. On the flip side, Professional Services Commercial insurance plans saw the fastest acceleration in March; their annual rate of change was +6.88%, up 0.15 percentage points over February’s rate.”

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 in the U.S. The annual growth rates are determined by calculating a percent change of the 12-month moving averages of the monthly index levels versus the same month of the prior year.

The S&P Healthcare Economic Composite Index is a weighted average of the S&P Healthcare Economic Commercial Index and the S&P Healthcare Economic Medicare Index.  Alternatively, it is a weighted average of the S&P Healthcare Economic Hospital Index and the S&P Healthcare Economic Professional Services Index, as each of these indices has the analogous Commercial and Medicare component.

The table below summarizes the year-over-year change in the S&P Healthcare Economic Indices for the 12-month period ending March 2012. With each monthly release, the index levels, including the 12-month moving averages, are recalculated for the full history of the indices, whenever there are revisions to underlying data used in the models. The entire revised history, as well as full results for the underlying S&P Healthcare Economic Indices, is available from S&P Indices as a subscription service.

(12-Month Moving Average)
Index 1-Year Change (%)
S&P Healthcare Economic Composite Index 5.68%
S&P Healthcare Economic Medicare Index 2.41%
S&P Healthcare Economic Commercial Index 7.84%
S&P Healthcare Economic Hospital Index 5.50%
S&P Healthcare Economic Hospital Medicare Index 1.80%
S&P Healthcare Economic Hospital Commercial Index 8.49%
S&P Healthcare Economic Professional Services Index 5.58%
S&P Healthcare Economic Professional Services Medicare Index 2.99%
S&P Healthcare Economic Professional Services Commercial Index 6.88%
Source: S&P Indices
Data through March 2012

The S&P Healthcare Economic Indices were developed in consultation with Health Index Advisors, a joint venture between Aon Hewitt and Milliman, Inc., and were derived from the former Milliman, Inc. Health Cost Index™ which was first published in 1987. The complete methodology, fact sheet and supporting research for the S&P Healthcare Economic Indices are available at www.healthcareindices.standardandpoors.com.

Categories: Health News


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