Private Insurance Plans Pay Hospitals More Than Medicare for Same Services 

By Consumers for Quality Care, on May 29, 2024

A study conducted by RAND found that, on average, hospitals charged patients with private and employer-based coverage 254 percent of what they charged patients with Medicare for the same services, according to Axios. 

The findings emphasize how widely prices for health care services can vary based on a patient’s insurance coverage, the state they’re covered in, and the hospital they visit. Consumers with private insurance plans in states like Arkansas, Iowa, Massachusetts, Michigan, and Mississippi were charged less than double what consumers with Medicare were charged, while consumers with other private insurance plans in such states as California, Florida, Georgia, New York, South Carolina, West Virginia, and Wisconsin paid hospitals more than three times what consumers with Medicare paid.  

It was even found that variations in pricing existed between different hospitals of equal quality ratings in the same city. The data also showed that consolidation among health care systems resulted in higher prices for consumers.  

Armed with this information, employers have an opportunity to negotiate better deals with hospitals. This could reduce health care costs overall, because hospital spending comprises 42 percent of U.S. health care spending for the privately insured. “There’s so much variation,” explains Principal Investigator Brian Briscombe. “There might be valid reasons why one hospital is more expensive than the other. But there’s definitely some room for shopping, shall we say?” 

The disparity in health care costs between consumers with private insurance and those with Medicare continues to grow. CQC urges policymakers to take action to ensure hospitals provide transparent pricing data so that Americans know what it will cost to access their hospital care.