By Kevin Kennedy, Elianna Clayton, Bill Johnson, Katie Martin
November 12, 2020
In the first brief of the Past the Healthy Marketplace Index series, we explored how prices compared across the country and found that, in 2017, health care prices for specific services varied by as much as 22-fold across metro areas and even up 40-fold within them. In this next brief, we looked at variation in price growth and examined if that variation was related to the substantial observed differences in price. Understanding if high prices are due to rapid price increases or different underlying factors can help determine areas of focus when crafting policies aimed at slowing health care spending growth.
In order to explore these differences in price growth, we analyzed the changes in negotiated rates – the actual prices paid – for six commonly-used services among individuals with employer-sponsored insurance (ESI) in more than 100 metros across the U.S. We found that, while prices grew in nearly every metro for every service, there was striking variation in price growth across geographies. Additionally, we found that high prices in 2017 were not always due to large price increases over time. Some regional prices have, instead, been consistently high throughout the study period potentially due to historically high costs of living or a provider market that has persistently been highly concentrated, among others.
Prices grew in more than 60% of metro areas for each of the six services we studied. We not only saw substantial increases in median prices of our sample services within metro areas, but wide variation in price changes across services as well. For example:
- C-section prices in some metros, like San Francisco, CA, had median price increases of $4,086 (+23%), while prices in others, like Richmond, VA, increased by just $313 (+3%).
- Median mammogram prices in Trenton, NJ, rose by $360 (+141%) over the 5-year period, but prices fell by $114 (-66%) in North Port, FL.
- Established patient office visit prices grew by more than 75% (+$71) in San Jose, CA, but fell by almost 10% (-$8) in Wichita, KS.