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Why does health care cost so much? New report points to hospitals

A new report from UnitedHealth Group, a large managed health care company, found the annual cost of hospital inpatient services exceeded $200 billion in 2018. And that was just for patients with private insurance.

If hospital prices grow at their current rate, the annual spending total could exceed $350 billion by 2029.

The report finds that prices set by hospitals for services – not physician salaries – are responsible for driving up spending. This is best illustrated by comparing the annual average increases in hospital and physician prices between 2013 and 2017:

  • Inpatient hospital costs for treatment of hypertension (high blood pressure) grew by 6.5 percent while physician prices remained relatively steady, increasing about 1 percent annually.
  • Hospital costs for childbirth increased each year, 6 percent for vaginal delivery and 5.5 percent for cesarean section. Spending for physician services grew also, but at a slower rate of 2 percent a year for both vaginal and cesarean deliveries.
  • Did you or a loved one get an appendectomy? Hospital costs for this relatively common surgery jumped an average of 7.5 percent annually between 2013 and 2017. Meanwhile, physician prices remained the same, with 0 percent growth.

The conclusion of the report: Slowing the rate of hospital inpatient costs to the level of physician price increases would make health care more affordable for consumers and employers.

Something to think about. Voices for Affordable Health is particularly interested in hearing your stories about unexpected or excessive hospital bills. Please share your stories with us and sign our petition asking Congress to fix this problem.