Medicare Growth Rate Increases at All-Time Low 1.97%

Growth rates in Medicare claim costs increased at an annual rate of 1.97 percent over the 12 months ending Sept. 30, 2011, an all-time low, according to a Standard & Poor's news release (pdf).

Healthcare costs covered by commercial insurance, however, increased by 8.03 percent over the past fiscal year and have increased for five consecutive months.

David Blitzer, chairman of the Index Committee at S&P Indices, said in the release that the widening gap between Medicare and commercial costs can possibly be attributed to three factors:

•    Medicare establishes payment updates by law, while commercial insurers must negotiate or set prices that hospitals and other providers will accept and will satisfy their budgets.
•    Utilization and price trends are usually different between the two groups of insurance. Medicare payments have a higher proportion of chronic diseases and commercial insurance plans have a higher proportion of acute cases.
•    Medicare members receive care despite the state of the economy, while many commercial insurance members rely on employment for coverage.

Related Articles on Medicare:

CMS to Launch Three Demonstration Programs to Curb Improper Payments

Fitch: Medicare Cuts Would Take Largest Toll on Lower-Rated Hospitals

Medicare to Cover Yearly Primary Care Visits to Prevent Cardiovascular Disease

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