Across the nation, hospitals treating patients with private health insurance were paid on average 2.4 times the Medicare rates in 2017, according to the RAND analysis. The difference was largest for outpatient care, where private prices were almost triple what Medicare would have paid.
The disparity shows how competition has faltered in an opaque market where the costs of care are secret and hospital systems are increasingly consolidated, gaining outsize clout in price negotiations with employers, some experts say.
Because rates are normally a closely held secret between insurers and hospitals, the RAND study reveals a startling first glimpse of how much a broad swath of hospitals are charging private insurers. The lack of transparency, coupled with public outrage over rising hospital bills, has spurred calls for disclosure of the rates negotiated. This is the first time pricing information on a large group of individual hospitals has been made public.
The RAND researchers gathered information on 1,598 hospitals, about a third of the total number in the United States, using 4 million insurance claims from 2015 through 2017. The information was collected from employers, some insurers and state agencies. The study did not identify the employers, but researchers named individual hospitals through the information they obtained, a rare public listing.
The claims included a variety of services, ranging from a hospital stay for heart surgery to an outpatient visit to the emergency room. The researchers compared the claim as it would have been reimbursed by Medicare and what the private insurer paid to determine the overall difference in prices.
In New York and Pennsylvania, private prices were less than two times the Medicare rates. Indiana, which has the highest private prices among the 25 states analyzed, pays roughly three times what Medicare does.
Insurers say they are motivated to keep hospital prices low and point to the battles they sometimes have over whether a high-priced system will be in their networks.
One outlier was Michigan, where private prices run about 1.5 times Medicare rates. The auto industry and unions that represent autoworkers have put pressure on the major Blue Cross plan to hold hospital prices down.
This article originally appeared in The New York Times.