Hospital costs rising steeply

New data from America’s Health Insurance Plans finds the price of inpatient hospital care rose by 8.2 percent per year between 2008 and 2010, one major contributor for skyrocketing health costs.

“The price of health care services is the major driver of overall health care cost growth,” AHIP President and CEO Karen Ignagni said in a statement.  “To make health care coverage more affordable for consumers and employers, there needs to be a much greater focus on the underlying cost of medical care.”  

AHIP says its report—published in the March issue of the American Journal of Managed Care—addresses “a critical gap in the ongoing health care cost debate.”

“Despite the keen interest in US health care costs, there is surprisingly little detailed public information available on one of its key components: transaction prices paid by commercial insurers for inpatient hospital care,” the study authors write.  

The report highlights which common medical procedures saw the highest growth in prices during the period studied.  Overall, the price for a spinal fusion increased the most (15.2 percent per year) between 2008 to 2010. That was followed by bronchitis and asthma treatment (10.3 percent per year) and uterine laparoscopic procedure for non-malignancy (9.8 percent per year).  

The report also found wide variation in hospital prices across states and localities.

Four states—New York, Texas, Tennessee and Pennsylvania—saw their costs rise even higher than average. New York increased their prices the most with prices rising on average more than 20 percent from 2008 to 2010, an annual growth rate of 10.5 percent, the report found. Additionally, hospital prices varied significantly among metropolitan areas within a state.

Rising hospital increases are driven in part by consolidation in the hospital industry, AHIP said. As hospitals consolidate, either merging with other hospitals or buying up physician practices, they have greater negotiating strength and competition is limited.  The result is higher prices for services, higher costs for patients, and often no improvement in the quality of care delivered. 

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