Medicare Cost Increasing at Its Slowest Rate Ever in Over Half a Decade, Says Standard and Poor

Standard & Poor has recently released data saying that last year US hospitals earned only one-third of revenue increase from patients covered by Medicare. The rest, two-thirds of revenue came from patients who had taken private health insurance in some form.

The S&P Healthcare Economic Index showed that the revenue from Medicare increased by 2.5 percent per hospital patient before June 2011, which is the slowest increase since January 2005, when S&P’s first started to monitor this income. That said, the revenue generated from patients who were covered by commercial health insurance increased by 7.8 percent by the same time.

The S&P Healthcare Economic Indices examine the income made by healthcare providers such as hospitals for the treatment of each patient under commercial insurance and Medicare programs.

The Medicare program, which provides federal health insurance coverage to disabled and elderly individuals, has experienced significant public controversy as Congress works to slash federal spending and as healthcare costs are among the largest expenses in the country.

Medicare supporters have stated that it and similar programs have been more effective at decreasing hospital and health care costs than insurance companies. It is predicted that the recent S&P’s data may help to defend this perspective.

According to chairman David Blitzer of S&P’s Index Committee, “In Medicare, the government sets the rules. It’s a single payer, which means it’s a single market structure,” forcing costs to decrease. That said, Blitzer could not explain why the costs associated with Medicare were so much less than those connected with the private sector in 2011.

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Source-Medindia