US Healthcare Costs Annual Growth Rates Increase in October 2011 According to the S&P Healthcare Economic Indices

NEW YORK, Dec. 15, 2011 /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 5.11% over the 12-months ending October 2011. This is a significant increase over the +4.74% annual growth rate posted in September 2011.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance increased by 6.91% over the year ending October 2011. This annual rate has risen for a fourth consecutive month. Growth rates in Medicare claim costs rose from its September low of +2.03% to an annual rate of +2.39%, as measured by the S&P Healthcare Economic Medicare Index. The S&P Healthcare Economic Hospital Medicare Index also increased from +0.66% in the year ending September 2011 to +1.12% in October.

The Hospital and Professional Services Indices posted increases of 4.97% and 5.02%, respectively, from their October 2010 levels. These are substantial changes from the +4.64% and +4.62% respective annual rates posted in September 2011.

"Healthcare cost growth rates seem to be stopping, if not reversing, the downward trend we had seen since the spring of 2010," says David M. Blitzer, Chairman of the Index Committee at S&P Indices. "In October, the Composite Index posted an annual rate of +5.11%, the Commercial Index +6.91% and the Medicare Index +2.39%. All three were up over September's rates; but with October's data the Commercial Index posted four consecutive months of accelerating annual growth rates, while the Composite Index accelerated three of the same four months.

"Over the last four months we have generally observed modest increases in the Composite's growth rate, with these increases driven by increasing growth trends in hospital costs. During this time period the Professional Composite Index fell each month between June and September and increased in October; while the annual growth rate in the Hospital Composite Index has steadily increased over the same months. Looking closely at the hospital costs, the most recent increases have been driven more by increases on the commercial insurance side. The annual rate for the Hospital Commercial Index has increased by 0.81 percentage points since June 2011; while the rate of the Hospital Medicare Index increased by a more moderate 0.40 percentage points. The difference between the annual growth in the Hospital Medicare Index (up 1.12% in October) and the Hospital Commercial Index (up 8.26%) remains high.  As noted in prior months, this difference could be due to a variety of factors, including contractual reimbursement provisions and differences in utilization.

"All the Healthcare Indices – Composite, Commercial, Medicare, Professional Services and Hospital – saw increases in their annual growth rates in October 2011. The highest increase of 0.51 percentage points was in the Professional Services Commercial Index. The lowest increase of 0.19 percentage points was in the Professional Services Medicare Index."

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.

Today and going forward, data released by S&P Indices for the S&P Healthcare Economic Indices use the revised methodology announced on December 1, 2011.

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 October 2011. 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 here http://bit.ly/hhTvLb.

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

About S&P Indices

S&P Indices, a leading brand of the McGraw-Hill Companies (NYSE:MHP), maintains a wide variety of investable and benchmark indices to meet an array of investor needs. Over $1.25 trillion is directly indexed to Standard & Poor's family of indices, which includes the S&P 500, the world's most followed stock market index, the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, the S&P Global BMI, an index with approximately 11,000 constituents, the S&P GSCI, the industry's most closely watched commodities index, and the S&P National AMT-Free Municipal Bond Index, the premier investable index for U.S. municipal bonds. For more information, please visit: www.standardandpoors.com/indices.   

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SOURCE S&P Indices

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