Healthcare costs rose 3.5% in the 12 months ending February 2014 compared to 4.9% for the same period in 2013. Healthcare cost trends are lower than a year or two ago, but remain 1% to 2% above inflation. In-patient fee-for-service rose 2.6% compared to 4.3% in 2013. Out-patient fee-for-service costs rose 4.9% compared to 6.3% in 2013. All but prescription drugs rose at a slower pace, according to the S&P Healthcare Claim Indices. Prescription drugs rose 3.5% compared to 1.5% in 2013. Higher growth in prescription drug costs reflects higher prices for generic and branded pharmaceuticals and shifting market shares between generic and branded.
Expenditures for large and small groups and administrative services only (ASO) plans show stable growth. Individual plans are the most volatile. While the growth in costs moved down through 2013, the most recent data suggest a jump in expenditures. Since this segment that the will be most affected by Obamacare, it is likely to be watched closely as the new healthcare law is implemented in coming years. For more information, visit www.spdji.com.
