Health Care Services Studied
California pays significantly more for common health care services than the rest of the country, and the gap has been widening. Various inpatient and outpatient services (see box) cost more in California than in other states, and they cost more in Northern California than in Southern California. Even after accounting for wage differences, a large gap remains. Researchers examined wage-adjusted 2016 data and found the following:
- California was the 16th most expensive state on average across the selected common services.
- California was the 8th most expensive state for uncomplicated childbirth at 9,751.
- CT scans of the head cost 36% more in California than in the rest of the country.
Premiums under the Affordable Care Act (ACA) were also higher in California than in the rest of the nation.
A critical factor in the fast growth of prices in California compared with the rest of the country is market concentration — including hospital consolidation and physician integration — which has been proliferating in the state along with price acceleration. The percentage of physicians in practices owned by a hospital/health system has increased dramatically. For specialists, the increase has been even faster.
Because high market concentration pushes health care prices upward, it is of serious concern for California policymakers and regulators.
Policies that can be considered to address high health care prices and ACA premiums are discussed in this report.