From the perspective of the average patient, there doesn’t seem to be much rhyme or reason when it comes to health care pricing. Previously we looked at the medical procedures and prescription drugs that are way too expensive in the U.S. compared to other developed countries. Health care prices can vary greatly within the U.S. as well, with some cities and states seeing wildly different medical bills for the same procedure, often under almost identical circumstances.
How much do prices vary?
There are many procedures, drugs, and other medical charges that demonstrate just how different health care prices can be in America, but for the purposes of this article, we’ll focus on a few severe cases.
In 2015, HealthSparq released data dating back to 2012 that revealed large price discrepancies for a number of operations among six large U.S. cities. For example, Gawker’s interactive map shows that when performed at surgical centers, a decompression, herniated disc operation ranged from $15,321 in Washington D.C. to $48,829 in Los Angeles, and a bunionectomy ranged from $5,353 in Washington D.C. to $22,061 in New York City.
A 2014 analysis by Castlight Health published the prices of four procedures across the U.S. via interactive maps. This information revealed how much patients with employer-sponsored health insurance were likely to pay for in-network services. Perhaps the most alarming finding was for the lower back MRI, which showed nearly a 400% difference in average price between Sacramento and nearby Fresno, at $2,635 and $676, respectively. The price ranges within a single area can be even more troubling, with New York City’s MRI prices ranging from $416 to $4,527.
Elizabeth Rosenthal of The New York Times revealed in 2013 that colonoscopies could cost as much as $8,500 in the New York area, compared with a high of $1,900 in Baltimore. The lowest price in New York was $740, but that was less than a tenth of the highest price. With the increasing rate at which patients are getting colonoscopies, this procedure provides an important case study. The Affordable Care Act now requires this procedure be fully covered as preventive care, but this coverage still does not apply to every patient.
Why the huge price differences?
In the case of colonoscopies, as well as other procedures, a certain amount the price difference can be attributed to variables such as the facility where the procedure is performed or who is administering a sedative. Local cost of living is a factor, too. It’s not always exactly an apples-to-apples comparison in these reports, but the overall problem is clear: Health care prices lack consistency and transparency.
In most other countries, this issue doesn’t exist because rates are set based on price negotiations with government bodies. But in the U.S., each health insurer negotiates prices with every doctor and hospital, often in secret to maintain a competitive advantage. Jennifer Schneider of Castlight explained that in these negotiations, the players with the most market share maintain the most power and influence.
Do the prices matter?
Well, yes and no.
Amid the increasing amounts of medical pricing data being leaked to the public, many have argued these prices are meaningless in the context of the complicated American health care system. Because insurers and hospitals negotiate, some patients can end up with a bill that’s a small fraction of the full price given to another patient.
Nevertheless, the big question Americans are trying to answer is: Why is health care so expensive in the U.S.?
There are several considerations that can’t be ignored, such as the absence of price controls, advanced medical technology, a lack of government involvement, questionable billing practices, health care monopolies, and more. It’s enough to give anyone a headache.
One solution gaining popularity is greater price transparency, which some claim will fuel more competitive (and hopefully fair) medical pricing. It’s not a silver bullet, but as long as American health care remains a business, patients deserve a chance to shop around.