Oregon Ranks Among Highest in Healthcare Costs
In a recent study titled: Prices for Common Medical Services Vary Substantially Among the Commercially Insured, David Newman, executive director of the Health Care Cost Institute, along with several other authors compared costs of basic medical services across the country (looking at commercial health insurance claims), and found some surprising results.
Out of 41 states reviewed, Oregon’s cost of basic medical services ranked among the top with a price ratio of 1.34 (or 34 percent above the national average). Alaska was at the extreme with a price ratio of 2.64 (more than two and a half times the national average). At the opposite end of the cost spectrum, Florida scored well under – at 0.79 of the national average. This chart shows how the others ranked, with 26 states above the national average.
Compared to our neighboring western states, Oregon’s medical services price ratio is the highest. This is how the western states price ratios ranked:
(Note that a several western states did not have sufficient data for the study including Montana, Idaho, and Wyoming.)
In a phone interview with Newman, The Lund Report posed the questions: why are prices for basic health services so much higher in Oregon compared to the rest of the country, and what can be done about it?
“High prices aren’t necessarily bad. Economists look at prices as signals in the market place. High prices could be a signal for variety of things: scarcity, lack of cost controls, high transaction costs, and among other things market imperfections such as price setting,” reported Newman (who is also an economist).
To find variations for some common healthcare services in Oregon compared to the city of Portland and the neighboring state of Washington, The Lund Report compiled data about the average cost of care bundles from Guroo.com. The table below shows
Oregon above the national average and higher than Washington in varying degrees.
Guroo.com was developed by Health Institute to encourage more cost transparency with the hope that consumers, providers, state employers, and policy makers would be looking at the prices and asking why there are variations. Newman noted however that the prices on Guroo.com are slightly more current than those in the study.
Out of 229 measures examined, the top 10 highest-ranking healthcare bundle costs (representing price ratios greater than 133 percent of the national average) for Oregon were:
- Thyroid Hormone Test
- Ultrasound (four types from pelvic to abdominal)
- C-Reaction Protein – CRP Test
- Heart SPECT Imaging Studies
- Radiation Treatment Delivery – Varied Intensity
- Mammogram – Preventive Screening – Film
- Bone Density Study – Hips, Pelvis, and Spine
The table below compares average costs of these highest-ranking care bundles for Oregon, Washington, and in the city of Portland.
At the lowest end of the price ratios for basic medical services, a Fasting Blood Glucose Test was priced at less than 90 percent of the national average. At the bottom tier of the price ratios for healthcare services were a variety of other tests
such as Vitamin D, Liver panel, and HPV among others representing greater than 90 percent or less than 100 percent of the national average.
The compiled data for this study comes from the Health Institute’s commercial claims database that includes nearly 3 billion final, fully adjudicated, paid claim lines (claim lines are the line-item elements in a medical claim).
In Oregon, the percent of individuals in the study is just 17.3 percent of the commercially insured populations under the age 65. The study does not account for self-insured, Medicare, Medicaid, and the remaining 82.7 percent of the employed population. See the chart to see how the data compares across the country.
“Healthcare claims data was provided by Aetna, Humana, and United. There is no doubt we welcome the participation from other insurers in the state to make these more accurate,” Newman told The Lund Report.
In answer to what can be done about lowering healthcare costs in Oregon, Newman was quick to assert that the Health Institute does not advocate policy. However, he did say, “If I was a state purchaser or employer, for my insurance plans, I’d be looking at things that have wide price variations. I’d be asking why we’re not giving more incentives to consumers to use lower cost providers, encourage the use of ambulatory labs, and narrowing the networks to exclude higher priced providers when in the community.”
Other articles appearing in The Lund Report recently describe the high profits earned by hospitals across Oregon in 2015.
Kathryn can be reached at [email protected].