A recent study of health care prices all over the country found that prices are, well, all over the place.
Done by the Health Care Cost Institute (HCCI), the study found that the price for the same procedures and types of doctor visits vary by state- and within states- by sometimes huge amounts.
Tennessee was one of the states with lower-than-average health care costs, however. On the whole, we Tennesseans pay 89 percent as much for the same care as the average American. The graph below shows the percentage of the national average that the average plan costs in that state. Tennessee is one of only 14 states (out of 42 that the study had data for) to have prices below the national average. Countrywide, health care costs nearly $10,000 per person per year.
The graph on the right compares the average price of health care across the country by state.
The graph below takes the cost of all the different health care plans available in Tennessee and compares them to the national average cost of a similar plans. To index the data, though, the Health Care Cost Institute set it up as a ratio. So, that on the x-axis 1.0 is the national average. As the graph shows, the majority of plans in Tennessee cost less than or as much as the national average. The y-axis shows the percentage of plans that fall into that ratio range.
The study included both people with private health insurance and those who receive health care through medicare and medicaid and other like programs. Those who did not have health insurance but do now due to the Affordable Care Act fall under the umbrella of private, because that system- roughly- provides tax rebates to supplement the cost of buying a private health insurance plan.
“Prices for medical services varied more than threefold in certain instances,” the team wrote in the report, which was published in the journal Health Affairs.
Some Sense
Some of the national variance makes sense in terms of basic economics.
“There is a big shortage of child psychologists in this country. If you are a single child psychologist somewhere in rural Pennsylvania, you are able to charge a high price because there are children lined up down the hallway,” HCCI executive director David Newman said in an NBC News report.
Or when a monopoly exists- as when there is only one large hospital serving an area- prices tend to be much higher, he said, because there is no competition to try to undercut the market.
No Sense
From the NBC Report:
An ultrasound for a pregnant woman costs an average of $268. But Alaskans pay $895 for the scans and they cost $201 in Arizona. Got cataracts? It’ll cost you $8,000 to get one removed in Alaska, compared to $2,300 in Florida. The national average? $3,300.
“The average price in Cleveland ($522) was almost three times that in Canton ($183), even though these two Ohio (cities) are only 60 miles apart,” the HCCI team wrote.
“Some of the variation in imaging prices is eight-fold around the Philadelphia area,” Newman added.
The team used the organization’s health cost website Guroo to research the report. “Aetna, Humana and United give us all of their paid claims data. It amounts to data on about 50 million Americans from 2007 forward,” Newman said.
Other studies have also shown prices varying wildly across the country. One of the best-known databases is the Dartmouth Atlas, which uses Medicare data.
Even in that single-payer system, the government pays twice as much for treating a patient in Miami as in San Francisco. People in the more expensive areas don’t get better care.
“It’s not necessarily the case where if you pay more you get more,” Cox said.
Most Americans – more than 60 percent or 190 million people — are covered by private health insurance, usually through an employer. About 32 percent have government health insurance of some kind, such as Medicare or Medicaid.
Medical costs can be paid by private insurance companies, directly by employers, by government-funded systems such as Medicare or Medicaid, and directly by patients. Hospitals negotiate different rates with different payers. Doctors and clinics sometimes do, too.
One study found that some hospitals mark up charges by as much as 1,000 percent.
“The concern is these higher prices get passed on to the consumer in the form of high co-pays and premiums,” said Cox. Her organization found that the average deductible for people with employer-provided health coverage increased from $303 in 2006 to $1,077 in 2015.
And this price variation helps explain why U.S. has higher healthcare costs than other countries, Cox added.
Americans now spend $9,523 per person a year on medical expenses — by far the most among developed countries.
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