Healthcare spending varies widely between metropolitan areas, according to new data from the Health Care Cost Institute.
The research group has unveiled its Health Cost Landscape report (PDF) and tool, which pulls from more than 1.3 billion medical claims submitted from 2018 to 2022. This data reflects 38 million people enrolled in employer-sponsored health coverage.
The analysis found that, on average, health spending per person with employer-sponsored coverage was $6,711. However, that figure can vary significantly between regions; for instance, at the high end, spending was 70% higher than the national average in Charleston, West Virginia.
By comparison, at the opposite end, costs were 41% below the national average in Bakersfield, California.
The report found that the price of services, utilization trends and the types of services used all contribute to the spending figures. Prices were the largest driver in variation, according to the report.
Regions with high spending on outpatient hospital services were the most likely to have high spending overall, the analysts found. Of the 102 metropolitan areas in the study with above-average spending, 93 had above-average spending for outpatient services.
Meanwhile, 68 had above-average spending on inpatient hospital care, and 41 saw above-average spending on professional services, according to the report.
HCCI also took a look at how concentrated key hospital markets are. Most of the metropolitan areas included in the study were highly concentrated hospital markets, with 88% either highly or very highly concentrated. Just 3% of the regions in the report were considered unconcentrated, the researchers said.
Bringing it all together, the researchers found that in the 10 markets with the highest spending, all saw prices that were above the national average. In addition, nine out of the 10 regions had highly or very highly concentrated hospital markets.
Seven of the 10 highest spenders had utilization rates that were above the national average, per the report.
Prices were more variable in regions with the lowest spending, the study found, with six of the 10 regions seeing prices below the national average. The remaining four metropolitan areas had prices above the national average.
Nine of the 10 lowest-spending markets saw utilization that was lower than the national average, HCCI found. Given how pervasive hospital concentration is, nine of the lowest-spending markets were also highly or very highly concentrated markets.
With these factors in place, the researchers said that cost can vary significantly even within the same state. For example, comparing Springfield, Illinois—one of the ten highest-spending markets—to Kenkakee, Illinois, finds spending in the former to be 38% higher than the national average. While Kenkakee is just 80 miles from Springfield, spending was 4% below the national average.
“In many communities, consumers aren’t using more care—they’re just paying far more for it,” said Katie Martin, HCCI president and CEO, in a press release (PDF). “Our new Health Cost Landscape shows just how much local market structures, especially highly concentrated hospital systems, shape prices.
"If employers and policymakers want to make care more affordable, they need solutions tailored to local price and market realities," Martin said.