Monday, May 2, 2016

Healthcare costs vary from town to town, state to state

"The National Chartbook of Health Care Prices 2015" using data from the Health Care Cost Institute (HCCI), and the report, "Prices For Common Medical Services Vary Substantially Among The Commercially Insured," released by HealthAffairs, show price differences for common medical procedures across the same areas and across the states.

The study used data from the Health Care Cost Institute to assess national commercial claims and compare 242 medical services prices across 41 states and the District of Columbia between Jan. 1, 2012, and Dec. 31, 2013. Prices were standardized to reflect costs in September 2015. The study also looked at city data. No state data was available for Alabama, Arkansas, Hawaii, Idaho, Montana, Michigan, South Dakota, Vermont and Wyoming.

National Public Radio, in "That Surgery Might Costs You A Lot Less In Another Town," offers a way to select your state for comparing to the national average for three common procedures.

Congressional Quarterly reported that Alaska, along with Wisconsin, North Dakota, New Hampshire, and Minnesota in their respective order, had the highest average health care prices.  Residents in Alaska paid twice the costs of the national average.  See "Health Costs Differ in States and Cities, Report Finds". Only 15 states had health care costs below the national average. Florida, Arizona, Tennessee, Maryland and Nevada had the lowest in the country.

USA Today reports in "Huge health care price differences even within same area, by state" (April 25) that prices can differ within an single urban area, showing disparities in MRI costs within a 100-mile radius of San Francisco.  While some residents in different cities in the same state could see significant price differences, in other states, differences between cities were minimal.

The USA Today article also indicates the amount of out-of-pocket for the patient also shows wide disparities, pointing to several explanations, including the fact that some insurance policies require consumers to pay the insurer's negotiated rate, while others require the insured person or the insurers and the consumer to pay the entire sticker price.

In San Francisco, that left one person facing out-of-pocket costs of more than $1,900 for that same lower back MRI that cost less than $500 in the same area. Insurers also often need to include certain expensive hospitals in their networks to get contracts with some employers. Then they will  sometimes put those hospitals in a pricing tier that requires higher out of pocket costs.

Explanations for the variation in healthcare costs vary.  The HCCI report points to wages, rent, market power and the lack of transparency as reasons for wide disparity in prices in its new report. USA Today notes a 2013 report on health care spending by the Institute of Medicine (IOM), which reported about 70% of the variation in spending in the commercial insurance market is due to differences in price markups by doctors and hospitals, which it said most likely reflects these providers' regional market power.

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