US Healthcare Costs' Annual Growth Rates Decelerated in May 2012 According to the S&P Healthcare Economic Indices

NEW YORK, July 19, 2012 /PRNewswire/ -- The S&P Healthcare Economic Composite indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 6.05% over the 12-months ending May 2012. This is a six basis points deceleration from the +6.11% rate posted for April 2012, but still above what was experienced throughout 2011 and early 2012.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans increased by 8.38% over the year ending May 2012, down from the +8.41% reported for April 2012. Growth rates in Medicare claim costs rose by 2.52%, according to the S&P Healthcare Economic Medicare Index, down from April's +2.60%.

The Professional Services Index annual growth rate increased from April 2012's +6.16% to May's +6.27%. The Hospital Index's growth rate fell to +5.56% in May from its +5.77% April rate.

In May 2012, the Professional Services Medicare Index increased 2.89%, its lowest annual rate since October 2009 and down from April 2012's +3.11%. The Hospital Medicare May's annual growth rate was unchanged from April, +2.05%. The Professional Services Commercial Index increased to +7.99% in May, from +7.70% in April; and the Hospital Commercial Index decelerated to +8.38% in May from the +8.78% posted for April.

"Most of our Healthcare Indices' annual growth rates decelerated in May 2012 from what we published for April," says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. "In May, six of the nine indices we publish saw a deceleration in their annual growth rates. The Composite Index posted an annual rate of +6.05%, the Commercial Index +8.38% and the Medicare Index +2.52%. These rates were all down from their respective April 2012 levels.

"While we saw a slowdown in most types of health cost growth rates in May, the most substantial deceleration was in the Hospital Commercial annual growth rate, which declined by 40 basis points to +8.38% in May. Professional Services Commercial rate of growth went in the opposite direction, jumping 29 basis points from +7.70% in April to +7.99% in May, leading the composite Professional Services Index to accelerate by 11 basis points to +6.27% in May. Usually we see the commercial indices move together, but May was a bit of an anomaly – commercial insurance costs accelerated for those using professional services and decelerated for those being treated in hospitals. There could be several things contributing to this, including timing and services provided during the visit.  We do not expect this divergence to continue in the future.

"Professional Services Medicare annual growth rate reached a 2½ year low in May; +2.89% is its lowest growth rate since October 2009. The Hospital Medicare rate remained unchanged from April, at +2.05%. The headline Medicare growth rate fell to +2.52% in May from its +2.60% April's rate.  While we have seen some monthly volatility in healthcare costs, as measured by their annual rates of change, the past 12 months or so has been highlighted by an upward trend in most costs and an increasing gap between the growths in costs covered by commercial versus Medicare plans."

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 U.S. 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 S&P Healthcare Economic Composite Index is a weighted average of the S&P Healthcare Economic Commercial Index and the S&P Healthcare Economic Medicare Index.  Alternatively, it is a weighted average of the S&P Healthcare Economic Hospital Index and the S&P Healthcare Economic Professional Services Index, as each of these indices has the analogous Commercial and Medicare component.

The table below summarizes the year-over-year change in the S&P Healthcare Economic Indices for the 12-month period ending May 2012. With each monthly release, the index levels, including the 12-month moving averages, are recalculated for the full history of the indices, whenever there are revisions to underlying data used in the models. The entire revised history, as well as full results for the underlying S&P Healthcare Economic Indices, is available from S&P Indices as a subscription service.

S&P Healthcare Economic Indices

(12-Month Moving Average)

Index

1-Year Change (%)

S&P Healthcare Economic Composite Index

6.05%

S&P Healthcare Economic Medicare Index

2.52%

S&P Healthcare Economic Commercial Index

8.38%

S&P Healthcare Economic Hospital Index

5.56%

S&P Healthcare Economic Hospital Medicare Index

2.05%

S&P Healthcare Economic Hospital Commercial Index

8.38%

S&P Healthcare Economic Professional Services Index

6.27%

S&P Healthcare Economic Professional Services Medicare Index

2.89%

S&P Healthcare Economic Professional Services Commercial Index

7.99%

Source: S&P Dow Jones Indices


Data through May 2012


 

The S&P Healthcare Economic Indices were developed in consultation with Health Index Advisors, a joint venture between Aon Hewitt and Milliman, Inc., and were derived from the former Milliman, Inc. Health Cost Index™ which was first published in 1987. The complete methodology, fact sheet and supporting research for the S&P Healthcare Economic Indices are available at www.healthcareindices.standardandpoors.com. A whitepaper introducing the S&P Healthcare Economic Indices has been published by S&P Indices and can be accessed at http://bit.ly/hhTvLb.

About S&P Dow Jones Indices

S&P Dow Jones Indices LLC, a subsidiary of The McGraw-Hill Companies is the world's largest, global resource for index-based concepts, data and research. Home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average(SM), S&P Dow Jones Indices LLC has over 115 years of experience constructing innovative and transparent solutions that fulfill the needs of institutional and retail investors. More assets are invested in products based upon our indices than any other provider in the world. With over 830,000 indices covering a wide range of assets classes across the globe, S&P Dow Jones Indices LLC defines the way investors measure and trade the markets. To learn more about our company, please visit www.spdji.com.

It is not possible to invest directly in an index. S&P Dow Jones Indices LLC, Dow Jones, and their respective affiliates, parents, subsidiaries, directors, officers, shareholders, employees and agents (collectively "S&P Dow Jones Indices") does not sponsor, endorse, sell, or promote any investment fund or other vehicle that is offered by third parties and that seeks to provide an investment return based on the returns of any S&P Dow Jones Indices index. This document does not constitute an offer of services in jurisdictions where S&P Dow Jones Indices or its affiliates do not have the necessary licenses. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties.

STANDARD & POOR'S and S&P are registered trademarks of Standard & Poor's Financial Services LLC.  "Dow Jones" is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones").

For more information:

Dave Guarino
Communications
S&P Dow Jones Indices
[email protected] 
212-438-1471

David Blitzer
Managing Director and Chairman of the Index Committee
S&P Dow Jones Indices
[email protected] 
212-438-3907

 

SOURCE S&P Dow Jones Indices

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