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Health Care Costs 254% Higher for Privately Insured Patients Than Those With Medicare

A RAND report found that in 2022, private insurers paid hospitals an average of 254% more than Medicare for the same services, up from 224% in 2020. Inpatient hospital services were paid at 255% of Medicare prices, outpatient services at 289%, and professional services at 188%. There was significant state variation, with some states under 200% and others above 300% of Medicare prices. Hospital spending makes up 42% of personal health care spending for privately insured individuals. Despite federal policies requiring price transparency, compliance is low, and the data from insurers is often redundant. The American Hospital Association criticized the report as unrepresentative and incomplete. Click here for article.

  • In 2022, private insurers paid hospitals on average 254% of what Medicare would pay, with inpatient services at 255%, outpatient services at 289%, and professional services at 188% of Medicare prices.

  • There is a wide variation in hospital prices by state, with some states like Arkansas and Iowa under 200% of Medicare prices, and others like California and Florida above 300%.

  • Hospital spending constitutes 42% of total U.S. personal health care spending for those with private insurance, but many hospitals and insurers are not fully complying with federal price transparency policies.

  • The American Hospital Association disputed the RAND report's findings, arguing it represents less than 2% of total hospital spending and provides a skewed and incomplete view.


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