Hospitals shift burden of rising healthcare costs to insurers

As healthcare costs continue to rise, already burdened hospitals and providers likely will shift more of those costs onto private insurers, a trend made clear by the latest Healthcare Economic Indices released by Standard & Poor's this week. 

The average cost of healthcare services covered by private insurance companies increased by 7.48 percent for the year ending June 2011. By comparison, the average cost of services covered by Medicare increased only 2.5 percent for that same time period. 

Why is it that the cost of services covered by private insurers so much higher? David Blitzer, chairman of the index committee at S&P Indices, told Reuters that it could depend on cost calculations by providers. Specifically, hospitals looking to recoup costs for utilities such as heating or electricity could calculate higher rates for private insurers, considering Medicare reimbursement rates are lower. 

"With June's data, we saw general acceleration in the annual growth rates of healthcare costs primarily led by medical costs funded by commercial insurance plans," Blitzer said in a statement. "The Medicare Index, on the other hand, was down 0.18 percentage points from its May 2011 annual rate and recorded its lowest annual growth rate in its more than six-year history." 

Ultimately, those costs are passed along to employers, who then pass them along to workers through plans, such as coinsurance, in which patients pay a percentage of their total healthcare costs. According to The Hill's Healthwatch Blog, employers are moving away from health plans that utilize copays, which require employees and patients to pay only a fixed amount for healthcare services. 

To learn more:
- read this S&P Indices announcement
- check out this Reuters article
- read this post from The Hill's Healthwatch Blog

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