New Study Shows Wide Price Variation For Privately Insured Patients

Across 13 selected U.S. metropolitan areas, hospital prices for privately insured patients—especially for outpatient care—are much higher than Medicare and vary widely within and across communities, according to a new study by the Center for Studying Health System Change (HSC) for the nonpartisan, nonprofit National Institute for Health Care Reform (NIHCR).

Based on claims data for 590,225 active and retired non-elderly auto workers and their dependents, the study found that average hospital prices for privately insured patients in the 13 communities with large concentrations of auto workers are about one-and-a-half times Medicare rates for inpatient care and two times what Medicare pays for outpatient services.

Within individual communities, prices vary widely, even after accounting for differences in the complexity of services provided. The highest-priced hospital typically is paid 60 percent more for the same inpatient services than the lowest-priced hospital. The price gap within markets is even greater for hospital outpatient services, with the highest-priced hospital typically paid nearly double the lowest-priced hospital.

The dramatic variation in prices from one hospital to another points to the significant market power of certain hospitals to command high prices, even in markets with a dominant insurer. The study highlights the importance of working urgently toward greater price transparency at the state and local level.