Hospital Costs May Be Higher for Patients With Private Insurance

A report released on Monday by the research group Rand Corp. revealed that individuals with private health insurance paid 254% more on average for procedures or tests at hospitals than what Medicare would have paid for the same services. 

The report used health insurance claims data from 2020 to 2022, and the researchers evaluated both inpatient and outpatient services from over 4,000 hospitals in 49 states and Washington, D.C. The study scrutinized around 6% of the total private insurance payments made to hospitals during this period.

“When you think about it in the way of an economist, all of it is paid by the patient. I mean, if it cost my job half as much to have health care, my salary would go up,” said Brian Briscombe, a health care cost analyst at Rand Corp. who led the report, to NBC News. 

According to Briscombe, high prices charged to private insurers will ultimately lead to higher fees paid by the roughly 160 million Americans receiving health insurance from their employers. These higher fees could be the result of increased copays, out-of-pocket payments, and/or reduced paychecks. 

Hospital services comprised 42% of health care spending for those with private insurance in 2022, with price hikes from hospitals playing a major role in increased spending per person. State-by-state data revealed significant disparities in hospital prices. In Arkansas, Iowa, Massachusetts, Michigan, and Mississippi, hospitals charged prices below 200% of Medicare rates. Conversely, California, Florida, Georgia, New York, South Carolina, West Virginia, and Wisconsin had hospital prices exceeding 300% of Medicare rates.

The report also found that when compared with other settings, hospitals frequently charge higher prices for prescription drugs administered by health care workers, due to their large pricing power. When a hospital has little competition in a specific region, it can charge patients and insurers whatever it sees fit.

The Rand report is intended to empower and inform employers and patients, Briscombe told NBC News. 

“When you think about the price of anything, whether you’re buying a Lamborghini, you think, ‘Is it overpriced’?” he said. “Well, the only person who can decide that is the person buying it.”

Reference 
Lovelace B Jr. Patients with private insurance can face higher health costs at hospitals. NBC News. May 13, 2024. Accessed May 13, 2024. https://www.nbcnews.com/health/health-news/private-insurers-patients-can-face-higher-health-costs-hospitals-rcna151951