US Healthcare Costs’ Annual Growth Rates Decelerated In May

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 2 1/2 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 IndexT which was first published in 1987. The complete

methodology, fact sheet and supporting research for the S&P Healthcare

Economic Indices are available at

http://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.

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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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