Some States Pay Twice the Price for Healthcare, New Report Finds

WASHINGTON, D.C. — Among the commercially insured, wide variations in prices have some states paying more than double what other states pay for healthcare, finds a new analysis from the Health Care Cost Institute (HCCI). The study also finds that, within states, healthcare prices can vary threefold. The study illuminates differences in prices for more than 240 common medical services in 41 states and the District of Columbia.

Compared to the national average, Alaska has the highest average healthcare prices, followed by Wisconsin, North Dakota, New Hampshire, and Minnesota. In New Hampshire and Wisconsin, more than 20{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of healthcare services are twice the national average price. Meanwhile, in Arizona, Florida, Maryland, and Tennessee, more than 90{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of healthcare services are priced lower than the national average.

Prices vary more for some healthcare services than others. 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.

“These data enable policy makers, 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,” said HCCI Executive Director David Newman. “We hope states use this information to design appropriate solutions to address potentially unnecessary price variation.”

Variation in prices has a substantial impact on healthcare spending and patient cost sharing. While some price variation can be attributed to differences in wages or rent, the remaining variation is most likely due to differences in underlying market dynamics, such as lack of transparency, market power, or the availability of alternative treatments, say the authors.

“We don’t pay for healthcare; we pay for a physical or an ER visit,” said Eric Barrette, co-author of the study and director of research at HCCI. “By drilling down into the price of individual services, we can better see where prices are higher than average and begin to unpack what is driving those higher prices.”

Nine states — Alabama, Arkansas, Hawaii, Idaho, Michigan, Montana, South Dakota, Vermont, and Wyoming — were excluded from the report due to lack of sufficient data or because of state statutes that discourage data sharing. “Some states’ data are locked up,” said Newman. “This byzantine behavior stands in the way of efforts to pursue transparency and understand the root causes of rising healthcare spending.”