S&P: US Healthcare Costs Rise 7.08% Over the 12-Months Ending September 2010

NEW YORK, Nov. 18, 2010 /PRNewswire/ -- Data released today by Standard & Poor's for the S&P Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs rose 7.08% over the 12 months ending September 2010. This is a slight deceleration from the +7.31% reported for the 12 months ending in August 2010.

Claim costs associated with hospital and professional services for patients covered under commercial health plans rose 8.54% over the last year, as measured by the S&P Healthcare Economic Commercial Index.  On the other hand, Medicare claim costs for services rendered by hospitals and physicians rose by a more modest 4.68%, as depicted by the S&P Healthcare Economic Medicare Index. These two indices also saw some growth deceleration versus their August reports of +8.64% and +5.07%, respectively.

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.

"While annual expenditures for Medicare and commercial insurance programs continue to rise faster than either inflation or GDP growth, the pace has slowed slightly in the last seven months," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "In the 12 months ended in September, the composite index rose 7.08% compared to the 12 months ended last February when the increase was 8.39%.  Expenditures associated with commercial health insurance plans continue to outpace expenditures for Medicare; the commercial increase over the 12 months to September was 8.54% vs. 4.68% for Medicare.

"The moderating trend in expenditure increases seen in most of the indices in the S&P Healthcare Economic Index Series continued in this release. Comparing the 12 months to September with the 12 months to last February, Medicare and the Hospital Medicare indices showed the most moderation in costs while the Hospital Commercial Index saw a slight increase in the growth of expenditures.  While encouraging, these trends can shift quickly as shown by patterns over recent years. Further, none of these data reflect the healthcare legislation enacted earlier this 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 September 2010. 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 are available from Standard & Poor's as a subscription service.

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 Standard & Poor's and can be accessed here http://bit.ly/drIgL2.

Standard & Poor's does not sponsor, endorse, sell or promote any S&P index-based investment product

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SOURCE Standard & Poor's