The Growing Difference Between Public And Private Payment Rates For Inpatient Hospital Care

The Growing Difference Between Public And Private Payment Rates For Inpatient Hospital Care

AHRQ Studies in Health Affairs Examine Divide in Hospital Reimbursements, Other Trends

Four studies produced by AHRQ researchers are featured in the December issue of Health Affairs, each providing new insight into recent health care trends. One article, “The Growing Difference Between Public and Private Payment Rates for Inpatient Hospital Care,” co-authored by AHRQ Director Richard Kronick, Ph.D., found that while private health insurers have traditionally reimbursed hospitals more than Medicare and Medicaid for inpatient stays, the difference between private and public reimbursements grew substantially between 2001 and 2012. Dr. Kronick and his colleagues found that payments to hospitals for inpatient services from private insurers in 2012 were 75 percent greater than payments from Medicare, a sharp increase from the approximate 10 percent difference annually between 1996 and 2001. Another of the articles, “In Four ACA Expansion States, The Percentage of Uninsured Hospitalizations for People With HIV Declined, 2012–14,” analyzed four states that expanded Medicaid coverage under the Affordable Care Act and found that among hospitalizations for patients with HIV, the percentage of patients who were uninsured fell from 13.7 percent in 2012 to 5.5 percent during the first half of 2014. The remaining two articles are “Insurer Competition in Federally Run Marketplaces Is Associated With Lower Premiums” and “Several Factors Responsible for the Recent Slowdown in Premium Growth in Employer-Sponsored Insurance.”

The Growing Difference Between Public And Private Payment Rates For Inpatient Hospital Care

1. Thomas M. Selden1,*, 
2. Zeynal Karaca2, 
3. Patricia Keenan3, 
4. Chapin White4 and
5. Richard Kronick5

+Author Affiliations

1. ¹Thomas M. Selden (Thomas.Selden@ahrq.hhs.gov) is director of the Division of Research and Modeling, Center for Financing, Access, and Cost Trends, at the Agency for Healthcare Research and Quality (AHRQ), in Rockville, Maryland.
2. ²Zeynal Karaca is a senior economist in the Division of Markets and Economic Research, Center for Delivery, Organization, and Markets, at AHRQ.
3. ³Patricia Keenan is a senior researcher in the Office of the Director at AHRQ.
4. ⁴Chapin White is a senior policy researcher at the RAND Corporation in Arlington, Virginia.
5. ⁵Richard Kronick is director of AHRQ.

1. ↵*Corresponding author

Abstract

The difference between private and public (Medicare and Medicaid) payment rates for inpatient hospital stays widened between 1996 and 2012. Medical Expenditure Panel Survey data reveal that standardized private insurer payment rates in 2012 were approximately 75 percent greater than Medicare’s—a sharp increase from the differential of approximately 10 percent in the period 1996–2001.