Growing gap between what insurers and Medicare spend on hospital stays
Between 2000 and 2012, the gap between what private insurance and Medicare paid for hospital stays grew from 10 percent to 75 percent.
A new analysis takes a look at the difference between what private health plans and Medicare pay for hospital stays.
The analysis, published by Thomas M. Selden in Health Affairs, examines the cost of hospital stays from 2000 to 2016.
Between 2000 and 2012, the cost of inpatient hospital stays rose much faster for privately insured patients than Medicare enrollees. At the beginning of the millennium, private plans were only paying 10 percent more than Medicare, but that gap grew to 75 percent by 2012.
Related: Hospital costs drive private health insurance spending
However, things changed in the subsequent four years. Private payments dropped sharply from 2012 to 2013 and were still lower in 2016 than they had been four years prior.
Meanwhile, during that time, Medicare payments rose at a faster rate than at any other point in the 21st century.
Thus, by 2016, private insurance payments were only 50 percent greater than Medicare payments.
While Medicaid paid the least for hospital stays, it trajectory was similar to private insurers: the average cost dropped in 2012 and climbed slowly in the following years.
The trends were similar for emergency department visits. The study analyzed emergency payments from a 20-year period, 1996-2016, and found that the average cost of an ER visit rose by roughly 50 percent for a Medicare patient but by more than 100 percent for a privately-insured patient.
Since 2005 the average Medicaid payment for an ER visit has actually been slightly higher than Medicare, although it has followed an almost identical trend.
The obvious major policy change that may have shaped the outcomes from 2012 to 2016 is the Affordable Care Act, although the ACA did not go into full effect until the end of 2013.
According to the authors, “more research is needed into not only the causes of rapid private insurance payment increases but also the consequences of those differences.”
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