Medical costs in commercial plans slowed between August 2012 and August 2013, according to the S&P Healthcare Claims Indices.
Medical costs for commercial plans rose at a slower pace, to 3.2 percent growth, in the 12 months ending August 2013, compared to 4.8 percent in the year-ago period. Inpatient fees for service rose 4.2 percent in 2013 compared to 4.4 percent the year before, while outpatient costs increased 5.7 percent compared to 7.9 percent in 2012. Prescription drugs ticked up just 0.9 percent in 2013 versus 2.9 percent the previous year.
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The report gives a more up-to-date but similar view of health spending than a recent analysis of 2012 national health spending by the Centers for Medicare & Medicaid Services that showed health costs increased at a 3.7 percent rate, the fourth consecutive year of slow growth. Annual spending growth rates have been between 3.6 percent and 3.8 percent annually since 2009.
The S&P Healthcare Claim Indices, based on claims data from 33 insurers and other healthcare data providers, indicate that the underlying costs per member per month have been growing more slowly.
Medical services are shifting increasingly toward outpatient care, and while demand has been rising, outpatient care is less expensive than inpatient care, said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “Over time, it may include more complex activities, more involved procedures than it had in the past, which may raise the price,” he said.
What may drive up medical costs is new technology. “Every time we develop a new procedure or invent a new machine that will save lives, it still always costs more,” Blitzer noted, adding that innovative technologies may enable the move towards more outpatient services.
At the same time, technologies may help to dampen the rise in costs once they are widely adopted. “We may be in a period where a lot of technology is diffused through the system and awaiting the next round of new technology, which will mean a period of rapidly increasing costs and then other periods that are more slow,” he said.
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Many studies have found that healthcare expenditures have been decelerating for several years, “but nobody has a clear idea why,” Blitzer said. Some have suggested preparations by providers and payers ahead of the implementation of the Affordable Care Act. Many have cited the recession as the main reason for people cutting back on their use of healthcare services.
“By now the recession effects should have worn off, even though the recovery has been disappointing. It’s time we blame something else instead of the recession,” he said.