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In 2022, employers and private insurers paid hospital prices averaging 254 percent of what Medicare would have paid—for the same services at the same facilities. That's according to a new RAND study that builds on our previous research. (In 2020, private plans paid hospital prices averaging 224 percent of what Medicare would have paid.)
Our new findings also underscore wide variation in hospital prices from state to state. Some states (Arkansas, Iowa, Massachusetts, Michigan, and Mississippi) had relative prices under 200 percent of Medicare. Others (California, Florida, Georgia, New York, South Carolina, West Virginia, and Wisconsin) had relative prices that were above 300 percent of Medicare.
Hospitals account for the largest share of health care spending in the United States. Such wide variation in their pricing suggests that employers—the largest source of insurance coverage in the United States—may be able to redesign health plans to ensure they better reflect the value of care provided.
But as coauthor Brian Briscombe says, “Price transparency alone will not lead to changes if employers do not or cannot act upon price information.”
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