High Healthcare Use Associated With Lower Prices, Report Finds

Areas with high healthcare use tend to have lower prices, and the reverse is generally true for areas where people use less healthcare, according to a new report from the Health Care Cost Institute (HCCI). The interactive report, the second in a series funded by the Robert Wood Johnson Foundation, is based on a review of 1.8 billion healthcare claims in 112 metro areas from 2012 to 2016.

In a statement, the authors of the report, the second of the Healthy Marketplace Index series, say the data allow users to compare price and use levels for 3 categories—inpatient, outpatient, and professional services—across different areas and track changes in both price and utilization over the 4-year period.

While the trend of high use leading to lower prices held in most cases, there were outliers: both Milwaukee, Wisconsin, and New York City were in the top 10 for overall high prices, and both had high service use. (Green Bay, Wisconsin, also ranked high for prices but had low utilization).

Areas with high prices and high healthcare use—and low healthcare prices and low utilization—are found in all parts of the country. As the authors noted, the variation seems to be rooted in “underlying differences in demand for healthcare services, supply of providers, or a combination of both.” Population differences, social determinants of health, and provider/practice patterns appear to do much to drive both cost and ways of using healthcare in given areas, the authors found.

And, they wrote, “While relatively high prices likely contribute to higher spending in both areas, examining the different drivers of use in these 2 areas could give stakeholders a deeper understanding of what causes differences in their spending levels.”

The report acknowledges how much market factors matter in driving spending, and thus, how difficult it will be create broad policy solutions to drive down spending if, like politics, “all healthcare is local.”

If there’s good news, it seems people are using less healthcare overall: the report found that over the study period, the median metro area experienced 17% fewer services. On the flip side, prices rose by 13%. The geographic variation is something the that future Healthy Marketplace Index reports will explore, according to Bill Johnson, PhD, lead author and senior researcher at HCCI.

“Our findings underscore the need to dive into the data and understand the local factors explaining health care costs, as there is not one overall narrative, but many individual ones from metro to metro,” Johnson said in a statement.

Data contributors to HCCI are Aetna, Humana, UnitedHealthcare, and Kaiser Permanente, who also provide funding in support of its research. HCCI’s leaders and staff create the group’s research and agenda and publish findings without influence from funders or data contributors.