The cost growth of medical care for people in employer-sponsored health plans slowed to an annualized rate of 3.8 percent in the first three months of the year, compared to cost growth of 6.3 percent in the first quarter of 2010, according to the recently released Thomson Reuters Healthcare Spending Index for Private Insurance.
"On both year-over-year and quarter-to-quarter bases, the rate of increase seems to be leveling off," said Gary Pickens, chief research officer at the Thomson Reuters Center for Healthcare Analytics. "These numbers will be a key indicator to watch as more elements of the healthcare reform legislation take effect."
[See also: Employer-sponsored health insurance rises 6.3 percent in 2009-2010]
The Thomson Reuters index provides a benchmark measure of healthcare inflation by measuring current and historical levels of healthcare spending for people in employer-sponsored health plans. The report also breaks out these costs by industry components to show inflation in hospital care, physician services and prescription drugs.
In the first quarter this year, hospital costs showed the steepest rise, growing at an annualized rate of 5.9 percent. Physician costs are rising at 3.2 percent annually while the cost of prescription medications is nearly flat – rising 0.3 percent.
Annual cost increases for prescription drugs have contributed to keeping healthcare inflation at its lowest levels, as reported by the index, since 2007 and if sustained through the rest of the year will mark a significant decrease of healthcare inflation compared to the past three years that has seen costs increasing between 6 percent and 8 percent each year.
The decrease of healthcare inflation also brings it roughly in line with the rate of inflation of the overall U.S. economy, which is projected to be 3.6 percent for 2011 based on economic data from the first six months of the year, according to Consumer Price Index data from the Bureau of Labor Statistics.