New Index Measuring Healthcare Data on 60 Million Insured Americans Shows Healthcare Costs Rising 3.5% in the Year to May 2013

NEW YORK, Oct. 2, 2013 /PRNewswire/ -- S&P Dow Jones Indices, a leading global provider of iconic financial market indices, has today launched a new, innovative measure that brings unprecedented transparency to rising healthcare costs in the United States. The S&P Healthcare Claims Indices, using actual claims data obtained from 33 leading health insurance companies and other healthcare data providers, provide an inside perspective on how quickly commercial healthcare costs are growing in the United States. The Indices are developed from medical and pharmaceutical claims covering approximately 60 million commercially insured Americans across all 50 States.

Data released today for the S&P Healthcare Claims Indices show that for the 12 month period through May 2013, medical and prescription drug costs together rose 3.5% as drug costs rose 0.6% and medical costs rose 4.2%.  These figures, which represent the most current data available in the healthcare industry, compare the average level of the cost indices in the 12 months ended May 2013 with the average level for the 12 months ended May 2012, the normal industry calculation of trends.

"The S&P Healthcare Claims Indices are based on data on actual expenditures for hospitalization, out-patient services and prescription drugs for Americans covered by commercial health insurance plans," says David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "These data provide a benchmark for evaluating various healthcare plans including the Affordable Care Act. The Indices are a relevant and transparent benchmark for measuring U.S. healthcare costs providing health insurers, consumers, employers, healthcare provider systems, and other users with the most current data available on the current rising cost of U.S. healthcare."

"The data released today for the S&P Healthcare Claims Indices confirm that while the rate of increase of medical care expenditures in the U.S. is slowing, it is still rising faster than disposable personal income. Where possible, healthcare expenditures do respond to economic incentives. Comparing branded and generic pharmaceuticals, unit costs – expenditures divided by days of prescription supplied – rose 16.1% for branded vs. 3.0% for generic. Utilization of generics rose 9.7% while utilization of branded fell 16.8% in the 12 months ended May 2013."

The table below summarizes key changes in healthcare costs in the twelve periods ended in May 2013 and May 2012.  These figures show expenditures and utilization per insured plan member and unit costs defined as expenditure divided by utilization.  As shown below, trends for total medical cost, medical cost excluding pharmaceuticals and pharmaceuticals declined over the period.  Two factors which may have contributed to these developments were shifts from inpatient to outpatient treatments as shown by the larger growth in outpatient expenditures. Second, as shown by the data on prescription drugs, there are cost-driven shifts from branded to generic pharmaceuticals.

Source: S&P Dow Jones Indices

The S&P Healthcare Claims Indices are a series of indices providing data on the cost, utilization and unit costs of healthcare services covering inpatient and outpatient services, and prescription pharmaceuticals. The expenditure and utilization measures cover inpatient and outpatient care, and generic and branded prescription pharmaceuticals. The indices are calculated for four lines of business: large insured plans, small insured plans, individual plans, and Administrative Services Only (ASO) plans.

The data used to calculate the indices are provided by several large data providers and leading health insurance plans and covers approximately 40%  of the total commercially enrolled private Fee-for-Service (FFS) U.S. healthcare insurance market.

These new indices were developed by S&P Dow Jones Indices in conjunction with healthcare experts at Health Index Advisors ("HIA"), a joint venture between Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON) and Milliman Inc.  S&P Dow Jones Indices also obtains advice and assistance from an advisory panel composed of the senior actuaries of several leading health insurance plans contributing data to the indices.

"This is a time of tremendous change in health care, with employers, insurers and providers looking for new and innovative ways to transform the health care delivery system," said Timothy Nimmer, fellow to the Society of Actuaries, member of the American Academy of Actuaries and chief health care actuary at Aon Hewitt. "We are proud to collaborate with S&P Dow Jones Indices to develop the S&P Healthcare Claims Indices, which provides an unparalleled level of transparency into health care costs. By benchmarking and assessing plan performance against an objective measure of underlying health care trend, all stakeholders—including employers, insurers, health providers and consumers—can make more informed decisions around their health strategies and achieve better outcomes for all Americans."

"This comprehensive, claim-driven Index is the first of its kind and will provide regular, timely information on changing healthcare costs in the commercially-insured population," said John Cookson, Milliman principal. "While this Index will serve an important role in ongoing attempts to control healthcare costs, the results should be understood in the appropriate context. These trends include patient copays and cost sharing. Since copays and deductibles are fixed for ongoing contracts, the actual trends that both the insurers and employers experience will be higher than those shown here."

The S&P Healthcare Claims Indices are published on a monthly basis, with a press release published quarterly. An annual schedule of index release dates, as well as a methodology document and FAQ on the S&P Healthcare Claims Indices, is published to www.healthcare.spdji.com. History of the indices dates back to March 2008.

For more information, please visit: www.spdji.com.

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SOURCE S&P Dow Jones Indices