Costs for common health services far outpace inflation, vary from city to city

The average cost of a hospital admission among large employer plans has increased by roughly $10,000 from 2008 to 2018.

“These rapidly rising costs of health services underlie growing premiums and deductibles for people with employer health insurance,” the authors write.

Costs associated with many common health services — including full knee replacements and laparoscopic appendectomies — have risen more rapidly than general economic inflation. A new analysis by the Peterson Center on Healthcare and Kaiser Family Foundation’s Health System Tracker cites such disparities while also noting geographic variations in the cost of the same health services.

For example, the average cost of a hospital admission among large employer plans increased by roughly $10,000 (68%) from 2008 to 2018. Meanwhile, the average cost for a lower back MRI was nearly three times higher in the Houston area ($1,106) than in the Las Vegas area ($404).

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“These rapidly rising costs of health services underlie growing premiums and deductibles for people with employer health insurance,” the six authors of the analysis collectively wrote. “Over the last decade, the amount employees have paid toward their premiums and out-of-pocket costs has exceeded wages, meaning that health care costs — and other expenses — have become harder to afford, even for those with relatively generous health coverage.”

Researchers cited wide disparities in the cost of inpatient hospital admissions in 2018 depending on the type of admission. Maternity and newborn admissions averaged $14,952, for example, while a surgical admission averaged $47,345.

Significant variations also were found in the cost of outpatient visits depending on the severity and complexity of each visit. Physician visits for the most complex cases (Level 5) averaged $182 per visit compared to $46 for the simplest visits. The most common physician visits are coded as Level 3, which averaged $90 per visit.

“A general lack of transparency makes it difficult for enrollees to know the total cost of a procedure or visit in advance, and even more difficult for them to know what their own liability may be. Additionally, many patients inadvertently receive treatment from out-of-network providers, putting them at risk for surprise medical bills,” researchers wrote. “As this analysis [also] shows, … the cost of common health services can vary considerably from city to city. In some cases, this variation may be due to differences in severity of illness or complexity of service, but in other cases, this variation highlights extremely high and questionable prices set for care.”

To reach their conclusions, researchers analyzed a sample of claims obtained from the IBM MarketScan Commercial Claims and Encounters Database. The analysis only includes costs for services covered by large employer plans that serve more than 1,000 employees.

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