Private health plans pay hospitals 241% of what Medicare would pay

A new report from the RAND Corporation finds that private health insurance plans pay hospitals more than 240% for health care compared to what Medicare plans would pay. Looking at claims data from nearly 1,600 hospitals between 2015-2017, private plans paid hospitals $13 billion for inpatient and outpatient services. But if private plans paid hospitals based on Medicare’s payment structures, that figure would be reduced by 60% to $5.3 billion. The price increases compared to Medicare varied from state to state in the 25 included in the analysis, from a 150% hike in Michigan to more than 300% in Indiana. Given these disparities in cost for private plans, “employers may choose to use these results to hold health plans and hospital leaders accountable for the prices they have agreed to,” the authors of the report write.