The relentless high prices of private health care

Data: Centers for Medicare & Medicaid Services’ Office of the Actuary; Chart: Will Chase/Axios

The pandemic disrupted nearly every facet of health care. But it hasn’t changed the way hospitals, doctors, drug companies and other health care firms continue to charge employer health plans — and workers — whatever they want.

What they’re saying: “The big honking problem is the prices that are being paid in the commercial sector,” said Mark Miller, the former head of the Medicare Payment Advisory Commission who is now at Arnold Ventures.

The big picture: Annual per-person spending growth for workplace health insurance has exceeded the spending growth among Medicare and Medicaid patients in nine of the past 13 years, according to federal data.

  • That rise is almost entirely due to higher prices because enrollment and demand for services among the commercially insured have barely budged, or fallen.

Zoom in: Federal regulations require hospitals to publish the prices they charge employer plans, exposing how companies pay different and significantly higher amounts for care.

  • One example: major hip and knee replacement surgery at NewYork-Presbyterian Hospital in New York City last year.
  • Empire Blue Cross Blue Shield paid $98,000; Cigna paid almost $71,000; UnitedHealthcare paid $66,000.
  • Medicare paid around $20,000.
  • “Medicare pays closer to internationally reasonable rates,” said Ted Doolittle, a former deputy director within the Centers for Medicare & Medicaid Services who is now a top Connecticut health official.

Between the lines: Health care providers contend the rates set by Medicare and Medicaid are too low, and they need to charge employers more to make up for that deficit.

Editor’s note: This series — based on interviews with two dozen health policy and industry experts, independent data, industry webinars, and court filings — explores the longstanding pitfalls of employer health coverage that are threatening a public in the middle of a pandemic.

Check out the rest of the stories in the series:

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