Health Care Inflation Slows For U.S. Employers

Health care expenditures aren’t entirely rising across the board: The “cost growth” of medical care for individuals in employer-sponsored health plans has slowed to an annualized rate of 3.8% in the first three months of the year, compared to the “cost growth” rate of 6.3% recorded for the first quarter of 2010, according to the recently released Thomson Reuters Healthcare Spending Index for Private Insurance. The index offers a benchmark measure of health care inflation by measuring current and historical levels of health care spending for individuals who are enrolled in employer-sponsored health plans. It also report also contains a breakdown of these costs by industry components to show inflation in hospital care, physician services, and prescription drugs. Hospital costs experienced the most significant rise in the first quarter of this year, growing at an annualized rate of 5.9%, the index indicates. Physician costs are rising at 3.2% annually, while the cost of prescription medications is essentially flat, trending upward by only 0.3%. Moreover, annual cost increases for prescription drugs have continued to play a key role in keeping health care inflation at its lowest levels, as reported by the index, since 2007. Sustained through the rest of the year, it will represent a marked decrease in health care inflation compared to the past three years, in which costs have risen by 6% to 8% annually. The decrease of health care inflation also brings it roughly in line with the rate of inflation of the overall U.S. economy. Given economic data from the initial six months of the year, the latter is expected to be 3.6% for 2011, according to Consumer Price Index data from the Bureau of Labor Statistics. To read the press release, click here: http://thomsonreuters.com/content/press_room/healthcare/healthcare_inflation_slows_for_US_employers. To view a copy of the index, click here: http://healthcare.thomsonreuters.com/indexes/assets/HPAYEMP110710030HSI-PIIndexJuneWEB.pdf.