Astronomical Hospital Mark-Ups Results in Higher Premiums

study posted in the Journal of Health Affairs concluded that many U.S. hospitals will often charge ten times the cost of a procedure – a 1000% mark up.  Although many who are out-of-network or uninsured only pay a percentage of these costs, auto insurers and workers’ compensation insurers often pay the full mark up, which results in higher premiums to consumers.  These mark-ups are often the result of lack of regulation and transparency, which means patients cannot learn what a procedure will cost before they get a bill, preventing comparison shopping.

The study evaluated a number of hospitals with surprising results.  One California hospital charged $10.00 for a lipid panel blood test, while another California Hospital charged $10,169.00.  North Okaloosa Medical Center in Florida charged $113,000.00 to treat respiratory infections in 2013, versus the $10,000.00 charged by Medicare.

Federal and state governments may want to consider limitations on the charge-to-cost ratio, some form of all-payer rate setting, or mandated price disclosure to regulate hospital markups.