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 2010levels. 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.