The Hidden Costs of Healthcare: Why Prices Vary and How to Shop Around

A medical test or procedure can bring an unwelcome surprise when the bill arrives. Even with insurance, many patients end up paying far more than they expected. What many people don’t realize is that the price of the same care can vary widely from hospital to hospital, even within the same community. For certain tests and procedures, shopping around ahead of time can make a sizeable difference in what patients pay out of pocket.

Why Do Healthcare Prices Vary So Much?

Online price comparison tools from insurance companies can reveal just how dramatic those differences can be. For example, Medical Mutual’s cost estimating tool showed an estimated out-of-pocket cost of $2,120 for laparoscopic appendectomy at one Cuyahoga County hospital. At another hospital, also in Cuyahoga County, the same procedure costs $748. The tool rated the quality of doctors at both hospitals about the same.

Northeast Ohio-based health care consultant Tom Campanella said price gaps usually come down to negotiations between hospitals and insurance companies. “If the provider has more leverage based on their market power, they will demand higher prices from the insurance carrier, which results in higher prices to the consumer,” he said.

Hospitals may also charge different facility fees to cover overhead, equipment and staff, said Campanella. Fees for surgeons and anesthesiologists can vary as well. How a visit is billed and whether care is provided at a teaching hospital or a community hospital can also affect the total cost, he said. “The end result may not be any difference in quality,” Campanella said. “In fact, (the higher-cost option) may be as good as the lower-priced one or maybe even worse.”

Preventive Care and Insurance Coverage

Most health plans are required to cover a set of preventive services – like screening tests – at no cost to you. This includes plans available through the Marketplace [Healthcare.gov]. Generally, these services are covered when provided by an in-network medical provider and you typically won’t pay a copayment or coinsurance for certain preventive services like immunizations and screening tests, even if you haven’t met your deductible. While, coverage can vary, and $0 cost isn’t guaranteed in all cases.

Preventive services are categorized for all adults, women, and children. [Healthcare.gov] provides links to specific covered services for each group.

Understanding Insurance Coverage for Specific Procedures

Some insurance plans may limit what they’ll cover at certain facilities. It’s best to check with your insurance provider before seeking care. [OHSU] accepts hundreds of insurance plans, including original Medicare, but some plans may have limitations.

Generally, health insurance companies cover lab tests that the medical establishment has deemed necessary, but plans vary [Levels]. Many routine and diagnostic lab tests are partially or fully covered, depending on your specific plan and circumstances. Some tests, like micronutrient panels or genetic screenings without medical necessity, are often not covered and may require out-of-pocket payment.

The Stakes are High for Patients

Survey research from health policy nonprofit KFF shows health care costs are now the public’s top economic concern. Those worries may grow as many people face higher insurance premiums after the loss of enhanced Affordable Care Act tax credits.

Tips for Navigating Healthcare Costs

• Shop Around: Compare prices for the same procedure at different hospitals and facilities.
• Check with Your Insurance Provider: Understand your coverage and potential out-of-pocket costs.
• Question About Facility Fees: Inquire about all potential charges, including facility fees.
• Consider a Health Savings Account (HSA): If eligible, an HSA can help you save for healthcare expenses.

Experts say patients still have to do some homework to find the best specialist for a major surgery, and will demand to weigh that specialist’s experience and rating against cost.