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

NEW YORK, Jan. 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 5.13% over the 12-months ending November 2011. This is a decline from the +5.29% annual growth rate posted for October 2011.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans increased by 6.96% over the year ending November 2011, down from the +7.10% reported for October. Growth rates in Medicare claim costs rose by 2.37%, as measured by the S&P Healthcare Economic Medicare Index, down from the 2.55% reported for October. The S&P Healthcare Economic Professional Services Medicare Index also dropped from +4.15% in the year ending October 2011 to +3.62% in November. The S&P Healthcare Economic Hospital Medicare Index increased slightly to +1.33% in November from its +1.28% October value.

The Hospital and Professional Services Indices annual growth rates also posted decreases from their October 2011 rates; they increased 5.05% and 4.97%, respectively, from their November 2010 levels. These are below the +5.14% and +5.21% respective annual rates posted in October 2011.

"After seeing a few months of increasing annual growth rates, particularly across commercial insurance plans, November's data presented us with some moderation in health care costs," says David M. Blitzer, Chairman of the Index Committee at S&P Indices. "In November, the Composite Index posted an annual rate of +5.13%, the Commercial Index +6.96% and the Medicare Index +2.37%. All three were down from October's annual growth rates.

"November's moderation in healthcare costs was more attributable to Professional Service practices than to Hospitals. The Professional Services Index's annual rate of change fell from +5.21% in October to +4.97% in November. Looking more closely at the Professional Services Indices, you can see that most of the change was driven by further declines in growth rates in costs covered by Medicare insurance plans, which has been the trend over the past year.

"With the exception of the Hospital Medicare Index, all the Indices saw decreases in their annual growth rates in November 2011. The highest decrease, 0.53 percentage points, was in the Professional Services Medicare Index. The only increase, 0.05 percentage points, was in the Hospital Medicare Index.  As we near the end of 2011, the main characteristic in healthcare costs was a trend toward increasing annual rates in the latter half of the year, after a prior 12 month's general trend of deceleration.  This was particularly true for costs covered by commercial plans; whereas costs covered by Medicare have been averaging about 2.5% over those same 18 months."

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 November 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 at http://bit.ly/hhTvLb.

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 $1.45 trillion is directly indexed to our 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.

It is not possible to invest directly in an index. S&P Indices does not sponsor, endorse, sell, or promote any S&P index-based investment product. This document does not constitute an offer of services in jurisdictions where S&P Indices or its affiliates do not have the necessary licenses. S&P Indices receives compensation in connection with licensing its indices to third parties.

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]
212-438-3908

SOURCE S&P Indices