Analysts who fear health spending is accelerating got plenty of evidence in Wall Street’s second-quarter results to support their thesis. But so did folks who hope spending is still under control.
Now everybody’s trying to sort out the mixed message.
The answer matters because deficit debates and affordability concerns revolve around forecasts that health spending will speed up as the economy revives. National health spending rose only 3.7 percent in 2012, the most recent year for complete results.
If costs don’t rise, the future looks better for consumers, employers and taxpayers.
To hear hospitals tell it — based on earning reports issued over the last two weeks — we might be heading back toward the painful 8 percent annual increases of the early 2000s.
Thanks to expanded coverage from the Affordable Care Act that began in January, “We have seen higher utilization rates than maybe we originally anticipated,” William Rutherford, chief financial officer at the hospital chain HCA Holdings, told stock analysts last week.
HCA’s admissions rose after declining in the previous two quarters. Revenue increased 5 percent and the company raised its profit forecast.
Tenet Healthcare, another hospital chain, booked its best quarter in six years for admissions covered by private insurance. Inpatient revenue at Universal Health Services’ general hospitals popped 12 percent. Most hospital stocks are up more than one-tenth since earnings season began.
So the insurance companies who pay for all this must be getting killed, right? Not exactly.
“Medical cost trends continue to be moderate,” Aetna’s chief financial officer said last week. Cost increases at WellPoint for the second quarter stayed close to a tame 6 percent, the company says. And it doesn’t see that changing soon.
