There are major cost differences in having a baby, even within the same city, a recent Castlight Health Inc. report shows. In New York City, the cost for a routine delivery ranged from $4,022 to $17,646. Los Angeles’ range was even wider — between $4,223 to $27,326 — and fellow California cities Sacramento and San Francisco were the two most expensive overall.
“Employees go to the high reputation providers,” says David Newman, the executive director of the Health Care Cost Institute. “In any field where there’s a must-have system that could happen. When you have systems where high reputations are must haves, they can charge higher prices.”
Cities in the South and Midwest had average procedure costs half the price of the two highest cities. In Cleveland, a typically more expensive caesarian section still costs only a little more than half that of a routine delivery in Sacramento.
“Overall, these cost differences are manifest across healthcare in general,” says Kristin Torres Mowat, senior vice president of Plan Development and Data Operations at Castlight Health. “You will find wide variation in prices across the states and cities with no rhyme or reason. It speaks to the inefficiency of our healthcare system and the lack of visibility of prices.”
She’s was also a part of another Castlight study earlier this year that found a huge difference in actual prices paid for mammograms, OB/GYN visits and other critical women’s health procedures in 30 the biggest U.S. cities. A mammogram in Cincinnati was $159 on average — three times less expensive than one in Sacramento.
These price differences are attributed to a few causes, like rent and market competition (or lack thereof).
Employers are in a tough position between getting their employers access to high reputation providers at a high cost or saving money, but limiting providers.
“It’s an easy choice to make, theoretically,” Newman says. But it’s harder to face when an employee has an illness that requires good care. One of the best ways employers can make sure they are finding the best value for the best cost is via comparison shopping, which, right now, is nearly impossible.
“It’s impossible to comparison shop because the market is opaque,” says Jeanne Pinder, the founder and CEO of clearhealthcosts.com. Her site tells people prices for medical procedures and items that are usually not available to the public, with the goal of increasing transparency in the healthcare marketplace. This type of information can help employers find the best value and help their employees.
“Employers are the primary purchasers of healthcare, but they’re often not very systematic and organized about it, partly because the system is opaque.” says Pinder. “It’s important for employers to ask themselves and their brokers if they’re really getting the best deal for themselves and their employees.”
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