No 2 prices the same: 13 findings on healthcare price variation across the U.S.

Commercially insured Americans in some states pay more than twice what their counterparts in other states pay for healthcare, according to a study from the Health Care Cost Institute.

The study, published in Health Affairs, is accompanied by HCCI's National Chartbook of Health Care Prices—2015, which highlights differences in prices for more than 240 common medical services in 41 states and Washington, D.C. The figures are based on a data analysis of the prices paid by people with commercial coverage under three major health insurers.

Here are 13 takeaways from the study.

  1. Two- to threefold variations in prices were identified within some states and Metropolitan Statistical Areas.
  2. Compared to the national average, Alaska has the highest average healthcare prices, followed by Wisconsin, North Dakota, New Hampshire and Minnesota.

3. Ratios of average state prices to national prices ranged from a low of 0.79 in Florida to a high of 2.64 in Alaska.

4. In New Hampshire and Wisconsin, more than 20 percent of healthcare services are twice the national average price.

5. In Arizona, Florida, Maryland and Tennessee, more than 90 percent of healthcare services are priced lower than the national average.

6. Prices vary more for some healthcare services than others, the study found. For example, states have similar prices for acupuncture, while prices for cataract removal vary significantly from state to state. The greatest variation in prices was observed for imaging, radiology and lab tests.

7. "These data enable policymakers, payers and consumers to see where prices for healthcare are highest compared to the national average and neighboring states, and begin to explore why these differences exist," HCCI Executive Director David Newman said in a prepared statement. "We hope states use this information to design appropriate solutions to address potentially unnecessary price variation."

8. Prices for services also varied widely between cities in the same state. Prices for knee replacements varied most in California, with a $27,243 average price difference between those performed in Riverside ($30,261) versus Sacramento ($57,504).

9. In Ohio, the average price of a pregnancy ultrasound in Cleveland was almost three times more expensive than Canton ($522 and $183 respectively), although the two cities are only 60 miles apart.

10. The study's authors said some price variation can be attributed to differences in wages or rent, but the remaining variation is most likely because of differences in underlying market dynamics, such as lack of transparency, payer or provider market power or the availability of alternative treatments.

11. Nine states were excluded from the analysis because there wasn't enough sufficient data available or due to state statutes that discourage data sharing. The excluded states are:

  • Alabama
  • Arkansas
  • Hawaii
  • Idaho
  • Michigan
  • Montana
  • South Dakota
  • Vermont
  • Wyoming

12. The reports were developed using HCCI's datase of de-identified HIPAA compliant claims data from Aetna, Humana and United Healthcare.

13. In total, HCCI has claims for 50 million Americans covered by employer-sponsored insurance per year. Data for the reports were taken from more than 1.8 billion claims spanning a two-year period from 2012-13. All prices reported by HCCI were trended upward to provide more current estimates.

 

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