Healthcare Prices Vary Across the Nation For People With Coverage Through Work

For patients with health insurance through their workplace, local prices for healthcare across and within 112 metro areas in the United States show wide variation, according to a new interactive report from the Health Care Cost Institute (HCCI).

HCCI said the report is the first in a series of releases from the Healthy Marketplace Index (HMI) project, which compares healthcare spending and utilization for a common set of services in commercial markets across the country.

The interactive report allows users to rapidly compare prices in different locations via interactive maps and charts. HCCI, an independent, nonpartisan research organization that analyzes the causes of the rise in health spending, is funded partly by 4 insurers that contribute claims data. For this study, HCCI analyzed over 1.78 billion commercial claims from 2012 to 2016. The study compares the average prices paid for the same set of services to establish benchmark prices in the US healthcare system as of 2016.

HCCI said the variation in healthcare prices was related to market-level differences in the price levels and growth of inpatient, outpatient, and professional healthcare services.

For example, patients in San Jose, California and Anchorage, Alaska, see prices that are 2.5 times higher than those in Baltimore, Maryland (or 65% higher than the national average). But residents of Cincinnati, Ohio, see healthcare prices that are 10% below the national average.

Besides Anchorage and San Jose, the third area where prices ballooned above the national average was San Francisco, California (49% higher). Those 3 places skewed the national average, and as a result, 86 of the 112 metros analyzed fell below the national average.

Within metro areas, price levels also varied among certain categories of healthcare services. In Green Bay, Wisconsin, physician and other ambulatory care prices were 43% above the national average, while inpatient and outpatient prices were 16% and 7% below the national average, respectively.

In El Paso, Texas, the opposite was true: professional services prices were below the national average by 19%, while inpatient and outpatient prices were 21% above the average.

The metros with highest price levels in 2016 were not necessarily the ones with the largest 5-year price growth. Price levels and growth were not necessarily related, as higher-priced areas experienced low price growth and vice versa.

For example, healthcare prices in Tampa, Florida, grew more than any other area since 2012 (21%), but were 3% below the national average in 2016. New York, however, had similar price growth, but because of its higher starting point, had prices 10% above the national average in 2016.

“Across the US, healthcare prices are rising, but what we saw is that certain areas were dramatically more expensive than others,” said Bill Johnson, PhD, study author and senior researcher at HCCI, in a statement. “There wasn’t one single reason a particular area had high or rising prices—the underlying drivers varied from place to place.”

“HCCI is committed to fostering greater transparency into the drivers of healthcare costs both nationally and regionally. This, and subsequent HMI releases, are intended to do just that,” said Niall Brennan, MPP, president and chief executive officer of HCCI. In an effort to better understand the factors contributing to market-level variation in healthcare spending, these future HMI releases will focus on healthcare utilization, spending, market competition, and waste.

An earlier report from HCCI found that in 2016, Americans were using less care but paying more for it, especially due to rising prices for prescription drugs, surgery, and emergency department visits.

The latest HCCI report is funded by the Robert Wood Johnson Foundation.