New Website Shows Health Care Prices Vary Widely Across Calif.
There is a wide variance in health care prices between Northern and Southern California, according to information on a new cost-comparison website launched last week, the Sacramento Bee reports (Buck, Sacramento Bee, 9/27).
Background on Site
Last week, California Department of Insurance officials announced the new website, which enables consumers to comparison-shop for health insurance.
The site is a collaborative effort between DOI, UC-San Francisco and Consumer Reports, a not-for-profit magazine that conducts consumer product testing and research. The project is federally funded through the Affordable Care Act, CDI officials said.
According to a statement, "The online tool provides important information for consumers about health care prices for more than 100 medical procedures and conditions and provides information about the quality of medical care."
CDI officials said the website is "the first of its kind" in California, though the Covered California health benefit exchange does have a health insurance comparison tool on its website (Gorn, California Healthline, 9/21).
Details of Price Differences
Gerald Kominski, director of the UCLA Center for Health Policy Research, said large price differences have "been part of the California market for decades" (Sacramento Bee, 9/27).
For instance, according to data on the website:
- The average total price for a complete hip replacement was $51,458 in the Sacramento region, compared with $27,748 in east Los Angeles County;
- The average total price for a knee replacement surgery is $42,488 in the Sacramento region, compared with $27,276 in east Los Angeles County;
- The average total price for a typical cesarean section is $28,828 in the Sacramento region, compared with $17,567 in east Los Angeles County; and
- The average total price for one year of lung, bronchi or mediastinum cancer treatment was $28,045 in the Sacramento region, compared with $21,508 in east Los Angeles County (California Healthcare Compare website, 9/28).
However, the price differences are not universal -- the data show that some procedures cost more in Southern California. For instance, the average total price for a colonoscopy screening was $732 in the Sacramento region, compared with $885 in east Los Angeles County.
Kominski said the issue is not caused by the ACA, but rather that the law "gives a degree of transparency in the market that's never existed before."
Some experts say the variance in health care prices is driven by a lack of competition in the northern part of the state. According to the Bee, Northern California has a lot of large hospital chains, while smaller hospitals and independent physician practices make up much of the health care landscape in Southern California.
Kominski said, "Northern California is dominated by a few large hospital chains, which confers considerable negotiating power on them." Because of that, he said that "insurers can't use the take-it-or-leave-it strategy that works a little more effectively in Southern California."
However, Jan Emerson-Shea, vice president of external affairs at the California Hospital Association, said hospitals must account for many economic pressures -- including required seismic retrofits, unionized labor contracts and new medical technology -- when calculating billing rates. She added, "Overhead is a huge piece of it, as well as types of services. ... If one hospital has a trauma unit and a burn unit, it'll have a higher cost structure than one that doesn't have that high level of specialty services."
Emerson-Shea also said that expecting consumers to comparison-shop for health care services could be unrealistic. "It's a nice hypothetical ... but in most cases, that's not how most people get their health care," she said.
Kominski said that increased transparency of health care costs likely will lead to more scrutiny among consumers. "People are going to ask: 'We are paying more for health care, but are we getting more?'"
However, he added, "True price transparency will be achieved when consumers know exactly what doctors and hospitals are paid for specific services ... not figured out through a series of calculations after the service is performed" (Sacramento Bee, 9/27).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.