Further Acceleration in US Healthcare Costs in February 2012 According to the S&P Healthcare Economic Indices

NEW YORK, April 19, 2012 /PRNewswire/ -- The S&P Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.75% over the 12-months ending February 2012. This is an acceleration from the +5.23% annual growth rate posted for January 2012.

Healthcare costs covered by commercial insurance plans, as measured by the S&P Healthcare Economic Commercial Index, increased by 7.73% over the year ending February 2012, up from the +7.09% reported for January 2012. As measured by the S&P Healthcare Economic Medicare Index, growth rates in Medicare claim costs rose by 2.72%, up from the +2.39% reported for January 2012. The Professional Services and Hospital broader indices' annual growth rates also increased from their January 2012 rates; these indices posted February 2012 annual rates of +5.71% and +5.52% respectively.

The Professional Services Medicare Index which had hit a two-year low of +3.31% in January 2012, recorded a slight increase in February 2012 with an annual growth rate of +3.55%. The Hospital Medicare annual growth rate continued its upward trend in February, with a +1.94% reading. The Professional Services Commercial Index accelerated to +6.78% in February from +6.04% in January; and the Hospital Commercial Index increased to +8.41% in February from +7.90% in the previous month.

"We observed further acceleration in healthcare costs annual growth rates in February," says David M. Blitzer, Chairman of the Index Committee at S&P Indices. "In keeping with the trends seen since the second half of 2011, February data signaled a general upward trend in healthcare costs, as measured by annual rates of change. Last month's data, which was through January 2012, had shown a slight deceleration in most types of healthcare costs, but this was likely an anomaly in the actual trend. Over the past eight months or so, annual rates of change in per capita healthcare costs have generally been rising.

"In February, all nine indices we publish saw acceleration in their annual growth rates. The Composite Index posted an annual rate of +5.75%, the Commercial Index +7.73% and the Medicare Index +2.72%. All three were up from their respective January 2012 annual growth rates and are either very close to or more than a full percentage point above their respective 2011 lows. The Hospital and Professional Services Indices recorded annual rates of +5.52% and +5.71%, respectively, up from their +5.05% and +5.15% January rates.

"The Professional Services Medicare Index which hit a two-year low last month (+3.31%) saw an acceleration in February to +3.55%.  The Hospital Medicare Index was up 0.38 percentage points in February 2012 to a +1.94% annual rate.  Medicare cost increases in general, and the annual rate for the Hospital Medicare Index in particular, remain the lowest among the nine indices we publish. On the flip side, Professional Services Commercial insurance plans saw the fastest monthly acceleration; their annual rates of change were +6.78% in February, up 0.74 percentage points over January's rate."

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 February 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.

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.

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For more information:
Dave Guarino
Communications
S&P Indices
[email protected]
212-438-1471

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

SOURCE S&P Indices