One of the many benefits of Medicare is that your costs are the same no matter where you get care in a community. Consequently, people with Medicare do not have to “shop” for where they get care in order to keep their costs down. But, as Bloomberg News reports, some hospitals gouge non-elderly Americans because they can; people can reduce their costs only if they are willing to “shop” for where they get their care.
Our health care system should not encourage shopping for health care. Everyone in a given region should pay the same price. Otherwise, people who need care urgently, people with cognitive conditions, people who cannot drive long distances, among others, could be forced to forgo needed care or to pay a premium to get that care. Moreover, since the cost of hospital services is generally not bundled and rarely do people know the range of services they will need, it’s near impossible to know whether the whole bundle of costs will be lower at one place or another.
Bloomberg News describes how one woman, who was in labor, drove 45 minutes to get to a hospital that would charge her less to deliver her baby. It saved her “thousands of dollars.” Her total cost was $8,354 and she was responsible for $2,500. But, had she gone to a hospital closer to home in Monterey County, the cost for delivery of her baby could have been as much as $40,000.
Throughout the US, some hospitals charge a lot more than other nearby hospitals. And, there is no correlation between higher hospital prices and better quality care. But, high hospital costs drive up health insurance premiums.
In 2023, Americans spent $4.5 trillion on health care. A lot of that money goes to hospitals.
As a result of recent legislation, hospitals must post their prices for public review. But, is that enough? And, what explains the large price disparities within a region?
While high hospital costs can stem from high staffing or maintenance costs or the simple ability of hospitals to set their prices as they will, some hospitals charge some insurers way more for their services than others because some insurers deny a lot of their claims or otherwise require them to expend more resources to get patients the care they need.
Today, according to Rand research, companies pay more than double what Medicare pays for the same services. In Indiana, companies pay almost three times what Medicare pays.
Hospital prices are likely to continue to rise at an unsustainable rate if the government does not step in. Meaningful hospital competition is lacking. Ninety-six percent of hospitals are in non-competitive markets. MedPAC, which oversees Medicare payment and quality issues, recommends that Medicare continues to put financial pressure on hospitals to keep costs down.
Here’s more from Just Care:
- Hospitals still not disclosing their prices, violating the law
- Hospitals overbill Medicare, driving up costs for everyone
- Hospitals dropping Medicare Advantage because of concerns with patient care
- Rural hospitals accept Medicare Advantage at their peril
- Underpayments lead hospitals and specialists to cancel Medicare Advantage contracts
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