A recent study from the Health Care Cost Institute (HCCI) determined that prices for health care services can significantly vary from state to state, and even from city to city, to the point that states like Alaska and Wisconsin may pay twice the national average.
The team used data from the HCCI, a commercial claims database that includes nearly three billion final and fully adjudicated paid claims lines. From the information, it was concluded that prices among the state varied from a low of 0.79 in Florida to a high of 2.64 in Alaska, according to the paper.
Alaska was at the top in high prices but followed by Wisconsin, North Dakota, New Hampshire and Minnesota y that same order. In New Hampshire and Wisconsin about 20 percent of the health care services analyzed were twice the average as well. In the other hand, the states with the lower prices were Arizona, Florida, Maryland and Tennessee where nearly 90 percent of the services were under the national average.
“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,” said David Newman, HCCI Executive Director. “We hope states use this information to design appropriate solutions to address potentially unnecessary price variation.”
But sometimes the prices varied significantly even though cities were just miles from each other. For example, knee replacements in California varied the most, in Riverside the service costs on average $30,261 and in Sacramento $57,504. In Ohio, the average price for a pregnancy ultrasound in Cleveland was almost three times the price in Canton, $522 and $183 respectively.
Some of the differences among the states could be justified in terms of wages or rent costs that a local facility may have in one state compared to the other, but with the remaining variations, most of them could be due to differences in underlying market dynamics such as varying market power, lack of transparency, or the availability of alternative treatments, researchers said.
Some states were not studied because the HCCI did not have sufficient information about prices in health cares services or the state specifically signaled its lack of desire to compare its prices with the national average.