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- Posted May 14, 2024
Americans With Private Insurance May Pay More for Hospital Stay
Having private insurance may not be all it is cracked up to be when it comes to hospital bills, new research warns.
In a report published Monday by the nonprofit research institute RAND Corp., researchers discovered that patients with private health insurance may wind up paying more for procedures or tests performed during their stay than Medicare patients do.
On average, hospitals charged private insurance providers 254% more than what Medicare would have paid for the same services.
"The utility of this work is that it gives employers important tools they can use to become better-informed purchasers of health care services,"Peter Hussey, director of RAND Health Care, said in a news release. "Hospitals account for the largest share of health care spending in the U.S., so this report also provides valuable information that may aid policymakers interested in curbing health care costs."
Experts noted that patients also face higher costs.
"These very high payments ultimately result in higher premiums for health insurance coverage and can result in those needing care having to pay high prices to get it," Stacie Dusetzina, a health policy professor at Vanderbilt University in Nashville, Tenn., told NBC News.
In the report, researchers turned to health insurance claims data from more than 4,000 hospitals in 49 states and Washington, D.C., between 2020 and 2022.
Report author Brian Briscombe, a health care cost analyst at RAND, said the high prices charged to private insurers mean patients end up paying more, either through higher co-pays or out-of-pocket payments or a smaller paycheck.
"When you think about it in the way of an economist, all of it is paid by the patient," Briscombe told NBC News. "I mean, if it cost my job half as much to have health care, my salary would go up."
The report did find wide swings in hospital prices among states.
Hospitals in Arkansas, Iowa, Massachusetts, Michigan and Mississippi charged private insurance prices below 200% of what Medicare would pay.
Meanwhile, California, Florida, Georgia, New York, South Carolina, West Virginia and Wisconsin charged private insurance prices that were above 300% of what Medicare would pay, the report said.
Briscombe attributed the discrepancies to the pricing power hospitals can wield.
"Obviously, some hospitals cost more because they're better,"he said. "But as you get more market share, you kind of become the big game in town and it becomes very hard for an employer to say, 'We won't use that hospital.'"
Meanwhile, Medicare often pays less in part because it has more negotiating power with hospitals, Cynthia Cox, a vice president at KFF, a group that researches health policy issues, told NBC News.
But Molly Smith, group vice president for policy at the American Hospital Association, called the findings "a skewed and incomplete picture of hospital spending."
"In benchmarking against woefully inadequate Medicare payments, RAND makes an apples-to-oranges comparison that presents an inflated impression of what hospitals are actually getting paid for delivering care while facing continued financial and other operational challenges,"Smith told NBC News.
Cox noted there has been a push for more pricing transparency from hospitals, which would allow insurers to negotiate for lower rates.
A federal rule from the U.S. Centers for Medicare and Medicaid Services requires hospitals to post their prices. However, one report found only 24.5% of hospitals comply with the rule.
More information
Visit the KFF for more on health insurance costs.
SOURCE: RAND Corp., news release, May 13, 2024; NBC News
