New data from the Standard & Poor's Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services rose 6.70 percent over the 12 months ending October 2010, a deceleration from the 7.08 percent reported for the 12 months ending in September.
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.
The Index found that claim costs associated with hospital and professional services for patients covered under commercial health plans rose 8.21 percent over the year ending in October.
Medicare claim costs for services rendered by hospitals and physicians rose at roughly half that growth rate, up 4.18 percent. This is the lowest annual growth rate for Medicare claims costs since January 2008, when it was +4.02 percent. These two indices both saw growth deceleration versus their September reports of 8.53 percent and 4.68 percent, respectively.
"The annual growth rate of Medicare and commercial insurance costs has slowed significantly in the last five months and substantially dropped in the month of October," said David M. Blitzer, chairman of the Index Committee at Standard & Poor's. "In the 12 months ended in October, the composite index rose 6.70 percent, which is 1.7 percentage points less than our recorded peak of 8.40 percent in May 2010. Expenditures associated with commercial health insurance plans continue to significantly outpace expenditures for Medicare; the commercial increase over the 12 months to October was 8.21 percent vs. 4.18 percent for Medicare."
Blitzer said S&P has recognized "two patterns" in the current data. The first is the large and growing difference between commercial and Medicare annual growth rates, and the second is the across-the-board deceleration in these rates in 2010. Since May 2010, most of the indices annual growth rates have declined month-to-month.
Comparing the 12-months-to-October with the 12-months-to-September, the Hospital Medicare Index showed the most moderation in costs, up 3.33 percent versus +3.96 percent reported for September; while the Professional Services Medicare Index showed the slightest decrease in the growth of expenditures, up 5.13 percent versus +5.41 percent in September.
Both the Hospital and Professional Services Commercial Indices annual rates decelerated by about 0.3 percent in October, Blitzer said.