Health cost annual growth rate dips slightly

Deceleration not enough to signify any reversal of increasing health cost trends

Though health care costs remain higher than ever, the rate at which it’s growing has slowed slightly.

The average per capita cost of health care services covered by commercial insurance and Medicare programs increased by 5.21 percent over the 12 months ending January 2012, according to data from Standard & Poor’s Healthcare Economic Composite Index.

This was a decline from the 5.3 percent annual growth rate posted for December 2011.

As measured by the S&P Healthcare Economic Commercial Index, health care costs covered by commercial insurance plans increased 7.05 percent over the year ending January 2012, down from the 7.11 percent reported for December 2011. Growth rates in Medicare claim costs rose 2.4 percent, as measured by the S&P Healthcare Economic Medicare Index, down from the 2.52 percent reported for December.

“Health care costs’ annual growth rates decelerated modestly in January,” says David Blitzer, chairman of the Index Committee at S&P Indices. “The fall and early winter of 2011 was highlighted by a general upward trend in health care costs, as measured by annual rates of change. This month’s data—which was through January 2012—showed a modest deceleration in most types of health care costs, but not by enough to show any reversal of this trend. Over the past six months or so, annual rates of change in per capita health care costs were generally rising.”

The Professional Services Index’s annual growth rate also dipped from its 5.37 percent December 2011 rate, increasing by 5.13 percent in January. The broad Hospital Index’s annual growth rate increased slightly to 5.03 percent in January from its 4.99 percent December pace.

Looking at the narrower sub-indices, the Professional Services Medicare Index hit a two-year low of 3.32 percent in January 2012, down from 3.73 percent in December 2011. The Hospital Medicare annual growth rate increased in January at 1.56 percent, it was up from its 1.48 percent December level. The Professional Services Commercial Index decelerated to 6.02 percent in January from 6.15 percent in December; and the Hospital Commercial Index marginally decreased to 7.84 percent in January from 7.85 percent in the previous month.

The Professional Services Medicare Index was the only one to hit a two-year low, with 3.32 percent, Blitzer noted. It also showed the steepest deceleration, 0.41 percentage points, compared to December rates.

“The Hospital Medicare Index showed an increase in its growth rate in January, at 1.56 percent, up 0.08 percentage points from the last month,” he says. “It should be noted that this rate is still far and away the lowest among the nine indices we publish.

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 United States. 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.

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