Hospital spending surpasses physician and drug costs

The cost of health care for individuals with employer-sponsored health insurance rose 4% in the third quarter of 2011 versus the third quarter of 2010, and 0.9% versus the second quarter of 2011, new data reveal.

The Thomson Reuters Healthcare Spending Index for Private Insurance measures current and historical levels of per capita health care spending for plan participants with employer-sponsored coverage. The HSI-PI estimates are based on data from the Thomson Reuters MarketScan Databases, a dataset containing claims paid for inpatient and outpatient services, as well as outpatient prescription drugs.

The index tracks hospital care, physician services and prescription drugs.

The steepest growth through the third quarter of 2011 was hospital costs, increasing almost 6% annually and 1.3% quarterly change. Physician costs reflected a 2.9% year-over-year hike and drug costs increased 1.3%. Both figures also reflect increases over their marks for the second quarter of 2011.

"Insurance costs are still on the rise," says Gary Pickens, chief research officer at the Thomson Reuters Center for Healthcare Analytics. "While there has been a slight slow down to the pace of growth, overall rates are still increasing nationwide."

Raymond Fabius, chief medical officer at the health care business of Thomson Reuters, shares the most noteworthy of the index is that, “medical spending is continuing to accelerate at a significantly faster rate than the Consumer Price Index; an unsustainable pace for our economy. As a society, we need to figure out how to moderate this trajectory; we simply cannot afford to have hospital care costs for example advancing at 2-to-3 times general inflation in this country.”