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S&P: Commercial Carriers Feel More Pain

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The per-capita cost of the health care services covered by commercial health insurers is increasing much faster than the per-capita cost of the services covered by Medicare.

S&P Indices, New York – one of S&P Ratings Services’ sister companies – says the S&P Healthcare Economic Composite Index shows per-capita health care costs for both commercial and Medicare programs were 5.73% higher in August than in August 2010.

The year-over-year increase was up slightly from 5.69% in July.

But S&P found that the year-over-year increase recorded in August for Medicare program health care costs was just 2.16%.

For commercial plans, the rate of increase was 7.89%.

The S&P Medicare cost increase index hit 8.02% in November 2009 and has been falling ever since, S&P says.

S&P analysts found that Medicare has been getting a somewhat better deal on the cost of services by physicians and other professionals and a much better deal on hospital bills.

The professional services index was 6.68% for commercial plans and 3.86% for Medicare programs.

The hospital index was 9.05% for commercial plans and just 0.81% for Medicare.

“The divergence between the rate of cost increases between Medicare and commercial plans has become larger over the summer months,” according to David Blitzer, chairman of the S&P index committee.

S&P worked with a joint venture affiliated with Aon Hewitt, Lincolnshire, Ill., and Milliman Inc., Seattle, to develop the health cost index family.

S&P notes that the cost indices reflect increases in use of care as well as the price of care.