It costs nearly $6,000 more, on average, for an appendectomy in Dayton than it costs for the same procedure in Cincinnati, even though the cities are less than a hour’s drive from one another, according to a study released by the nonprofit Health Care Cost Institute.
The 2015 Health Care Cost and Utilization Report found vast disparities in the prices of medical procedures from city-to-city and state-to-state based on actual claims data from some of the nation’s largest health insurers.
While the average cost to have an appendix surgically removed in Dayton is $17,967, you can have the same procedure done in Cincinnati for $12,254, according to the report. Meanwhile, the average cost of an appendectomy in Columbus is $15,290. The report did have costs for smaller cities like Springfield or Hamilton.
The trend can be seen across a variety of the most common inpatient surgeries, including artery bypass and stenting, intestinal procedures and hip and knee replacements, even cesarean delivery, also known as C-section, which costs $17,525 in Dayton — more than $1,400 higher than in Cincinnati ($16,116), and more than $2,500 higher than in Columbus.
The study, which covers the period from 2012 through 2015, examined approximately 3.7 billion insurance claims for nearly 40 million Americans covered by employer-sponsored insurance from four national insurance companies: Aetna, Humana, Kaiser Permanente and UnitedHealthcare.
“What makes this study significant is that these are the real prices and real dollar amounts that insurance companies paid, not the chargemaster,” said John Bowblis, a Miami University economics professor who specializes in health care, referring to the master list of charges for different services that each hospital maintains.
However, insurance companies rarely pay the listed charges, Bowblis said, instead negotiating with hospitals and doctors on the price of every treatment.
“It comes down to how well can that insurance company negotiate,” he said. “As more hospitals have bonded together in ever larger networks, their negotiating leverage has increased.”
Bowblis said the most powerful hospital organizations use their market leverage to raise prices for procedures, which accounts for most of the price differences across regions, even neighborhoods, although consumers have been shielded from much of the impact.
“Most of the cost of those expensive procedures are borne by insurance companies,” Bowblis said. “But if you’ve got a 20 percent co-pay, and you’re paying $5,000 t0 $10,000 more for a procedure in one market versus another, you’re still going to be hit pretty hard.”
While prices continue to rise for the most expensive procedures, hospitals are also negotiating higher fees for more common services, such as emergency room visits, and charge higher prices for drugs. The price for brand anti-infective drugs, for example, more than doubled over the study period, according to the report.
Such price increases have had a substantial impact on health care spending and patients’ cost sharing.
Annual spending on health care for the privately insured in the United States increased 4.6 percent in 2015 to $5,141 per person, while spending grew just 3 percent in 2013, and 2.6 percent in 2014, according to the report.
“Using data from four of the nation’s largest health insurers, we’re able to look closely at the changes in health care use and prices over time to understand what is driving costs,” said HCCI executive director David Newman. “Year after year we see one constant: Rising prices that are accelerating spending growth.”
Based on a snapshot of annual spending in 18 states included in the report, Ohio’s per capita spending was $223 higher than the national average of $5,141, while the cost of deductibles, co-pays and other out-of-pocket costs was $886, also higher than the national average: $813.
Of the states surveyed, 11 had lower per capita spending than the national average, while just eight of the selected states had lower than the national average out-of-pocket spending per person.
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