Medical Costs Vary Wildly Around The Country : Shots - Health News You may be paying $38,000 more for that knee replacement than someone in another state, or even a few hundred miles down the road. And there doesn't seem to be any method to this madness.
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That Surgery Might Cost You A Lot Less In Another Town

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That Surgery Might Cost You A Lot Less In Another Town

That Surgery Might Cost You A Lot Less In Another Town

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AUDIE CORNISH, HOST:

If you need surgery - say, a knee replacement - it may be worth your while to take a trip. The procedure can cost thousands less depending on your location. NPR's Alison Kodjak reports a new analysis of healthcare prices shows they differ wildly from state to state and even city to city.

ALISON KODJAK, BYLINE: The report is from the Health Care Cost Institute, and it analyzes a massive amount of payment data from three of the nation's largest insurance companies. The takeaway - health care prices are crazy.

DAVID NEWMAN: There doesn't seem to be systematic patterns with respect to what's high and what's low.

KODJAK: That's David Newman, the institute's executive director. He says some states are way above the national average, while others are cheaper. Arizona's healthcare prices are pretty low - about 82 percent of the national average. But next-door in New Mexico, the average prices are much higher. And even within states, prices can vary a lot, like for that knee replacement. If you live in Palm Bay, Fla., for example, you'll pay $17,000 more than you would in Miami.

NEWMAN: An insurer operating in Palm Bay, Fla., would send a stretch black limousine and driver that person and their spouse or partner down to Miami, put the partner in the Seminole Indian hotel casino with a $100 in chips while they take the knee replacement patient down to the hospital, perform the surgery and then drive them home afterwards. And there'd still be a lot of money to be saved.

KODJAK: These data offer the most detailed look available at private insurance companies are actually paying for health care. And it's clear that the health care market is not following traditional economic and market rules.

ZACK COOPER: And right now, the health care industry is simply broken.

KODJAK: Zack Cooper is a professor of health policy and economics at Yale. He says one driver of high prices is the consolidation of hospitals.

COOPER: We've seen hospitals buying up other hospitals at a pretty amazing rate, to the point now where, in a sense, we see most customers served really by one hospital. And it turns out that monopoly power in healthcare works just like monopoly power in other areas.

KODJAK: And that can drive up prices, he says. One way to fix that would be for consumers to travel further to see their doctors or go to a hospital. That would put powerful hospital systems in different cities in competition with one another and maybe help lower prices.

COOPER: We've got to be able to have an honest conversation with folks out there and say, look, you can't get everything locally, all right? You probably do have to travel a little bit further. And if you do, the returns are pretty tremendously large.

KODJAK: But Sarah Dash, president of the Alliance for Health Reforms, says there are ways to make competition bloom in healthcare.

SARAH DASH: Where it's shoppable, where it's elective, where it's not an emergency, where the price is knowable, you know, there are thing that can be done.

KODJAK: But there are limits.

DASH: A woman's going to go to the one OB/GYN that she goes to. So, you know, she's not going to run all over town trying to find the cheapest one.

KODJAK: Unless, maybe, her insurer makes it worthwhile. Alison Kodjak, NPR News.

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