Healthcare prices rose but use fell across US from 2012-16

By | March 12, 2019

Dive Brief:

  • Healthcare prices vary widely depending on U.S. location, according to a new interactive report from the Health Care Cost Institute. Despite huge variations between cities and towns, one trend held true: Over the four-year period, the average area saw healthcare prices rise 13% and utilization drop by 17%.
  • Metropolitan areas with high use tended to have lower prices, but that trend wasn’t consistent throughout. For example, Baltimore had the highest overall use in the country (34% above the U.S. median in 2016) but the lowest prices (26% below). By comparison, San Jose, California, had prices 84% above the national average though healthcare utilization there was 19% lower.
  • HCCI launched a set of tools allowing users to compare prices and use of healthcare services across 112 metropolitan areas in 43 states. The Healthy Marketplace Index (HMI), funded by the Robert Wood Johnson Foundation, used more than 1.8 billion commercial healthcare claims from 2012 to 2016 to chart prices and use of inpatient, outpatient and professional services.

Dive Insight:

The analysis comes as healthcare players — from providers and payers to policymakers — are exploring how to bend the cost curve without limiting access or raising out-of-pocket costs. CMS has been pushing hospitals to provide more transparency on prices and promoting the use of price compare apps. Some states have also mounted initiatives to help consumers compare prices. 

The HMI tools are the latest to try and shed light on how healthcare dollars are used and spent throughout the country. A report last year by the Network for Regional Healthcare Improvement also looked at pricing and utilization and found wide cost variations between five states: Colorado, Maryland, Minnesota, Oregon and Utah, as well as St. Louis, Missouri.

By and large, high use areas had lower prices and vice versa. Baltimore had the lowest overall prices and the highest utilization of services of any metro area in the country. By contrast, while San Francisco and Green Bay, Wisconsin, had some of the highest prices, they ranked below average for use.

But that wasn’t always the case. New York City and Milwaukee ranked in the top 10 for areas with highest overall prices, but also had high service use.

Among the highest-priced areas were San Jose, California, and Anchorage, Alaska, at 82% above the national median. Baltimore, however, was 26% below the median in 2016.

HCCI found metro areas along the coast tended to have higher prices than in the Midwest, but there were a lot of examples of neighboring areas with “starkly different” price levels.

The analysis also found variations within localities across different service categories. For example, Orlando, Florida, had outlier price levels in inpatient services 29% above the average, while Green Bay and El Paso, Texas, had outliers in professional services at 58% above and 10% below the U.S. median, respectively.

“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,” Bill Johnson, lead author and senior researcher at HCCI, said in a statement.

HCCI said future HMI tools will delve into such issues as geographic differences in prices for select services, wasteful spending and provider competition.

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