California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

Health Care Expenses Outpace Overall Rate of Inflation, Study Finds

Per capita health care costs increased by 7.32% on average over the previous 12 months ending in August, which is above the 1.1% overall inflation rate for the same period, according to a recently released Standard & Poor's study, HealthLeaders Media reports.

The statistics are consistent with a decade-long trend of rising health care inflation.

From August 2000 to August 2010, health care inflation increased by 48%, while the Consumer Price Index rose by 26% across the same period, according to Bureau of Labor Statistics data.

S&P's Vice President of Indices Maureen Maitland said that health inflation has risen at about a 7% rate across the last decade and also is outpacing the United States' gross domestic product growth rate. Maitland attributes the rise in health care costs to supply and demand, noting that current high demand for services allows physicians and hospitals to charge more to meet their budgets.

Robert Zirkelbach, a spokesperson for America's Health Insurance Plans, said that comparing medical inflation with overall inflation is an ineffective way to explain premium increases. He notes that premium hikes also stem from utilization trends, new technologies and price increases, which sometimes derive from hospital consolidation.

Other Findings

The report also found that physician and hospital claims costs associated with commercial plans increased by 8.66% for the year ending in August, while similar Medicare claims rose by 5.08%, despite the program's generally sicker population (Commins, HealthLeaders Media, 10/22).

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