Do you live in one of the highest-priced areas for health care?

How your address determines your health spending, regardless of how healthy you are.

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By

Myles Ma

Myles Ma

Senior Reporter

Myles Ma is a senior reporter at Policygenius, where he covers insurance and personal finance. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

Published|4 min read

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The U.S. spent an all-time high of $4.1 trillion on health care in 2020, representing almost 20% of the gross domestic product. [1] Unlike other countries, the question of who pays that expense is spread out among different government and private funders who each follow different rules, leading to vastly divergent costs. To make things more confusing, the cost of health care varies even more based on where you live. 

For example, a resident of the Bronx, New York, accounts for almost $8,000 a year in health care spending, almost double the annual cost of a resident of Honolulu, Hawaii. But even in the same area, different insurers spend varying amounts on patients. Private insurers spend an average of $5,592 per patient in the Bronx, while Medicare spends almost three times as much on Bronx residents. 

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Researchers from Yale, Stanford, and Dartmouth, revealed these cost disparities in a study published in July in JAMA Network, a medical journal. They found that when it comes to how much health care costs where you live, there’s almost no correlation with how healthy the population is.

“The most shocking finding in some ways was that spending is completely uncorrelated with mortality,” says Jonathan Skinner, a research professor in Dartmouth College’s department of economics who co-authored the study. 

Why is health care spending so all over the place?

There’s no obvious answer, Skinner says. The areas with the lowest spending “tend to be somewhat rural,” he says, while the New York metropolitan area is well-represented among the highest-spending areas. “New York is a very special place. It’s incredibly expensive, not just for prices, but also they tend to just have a lot of health care.”

But it’s not the case that the most expensive areas overall are the most expensive areas when it comes to health care. Otherwise you’d expect to see San Francisco above places like Gulfport, Mississippi, the sixth-highest-spending area for health care despite a median income well below the national average. [2]  

There’s a wide range of spending within regions as well, depending on who’s paying. Medicaid recipients in Rochester, New York, account for $8,239 in health care spending, among the highest rates in the country, while Rochester residents with private health insurance average $3,177, among the lowest rates in the country. 

This in-region variation is especially surprising because the amount of health care people consume, as measured by the number of inpatient bed days used, is “very similar across Medicaid, Medicare, and private insurance, even though these are people at different ages and they’re in the hospital for different reasons,” Skinner says. So in terms of how much health care people use, different regions have their own “medical signature” while “prices are seemingly almost random,” he says.

The researchers examined possible reasons for this disparity and found that the prices private insurance companies negotiate with health care providers are strongly associated with overall costs. However, more research and more data are needed to confirm what drives these wide ranges in health care spending. Private insurance companies account for more than 40% of health insurance spending in the U.S., much more than Medicare and Medicaid, so they have a big say in how much health care costs.

“There’s something going on, whether physician practice styles, hospital capacity, and particularly the market pricing mechanisms. How aggressive are hospitals charging? How much does the state Medicaid program cover? All of those different factors play a role,” Skinner says

Where health care costs the most

These are the 20 regions that spend the most on health care, based on a composite of private, Medicare, and Medicaid spending.

1

The Bronx, NY

$7,705

2

White Plains, NY

$7,426

3

Manhattan, NY

$7,397

4

Anchorage, AK

$7,318

5

Huntington, WV

$7,141

6

Gulfport, MS

$7,135

7

Abilene, TX

$7,128

8

East Long Island, NY

$7,116

9

San Angelo, TX

$7,004

10

Owensboro, KY

$6,872

11

Longview, TX

$6,784

12

Wichita Falls, TX

$6,775

13

Sioux Falls, SD

$6,775

14

Bismarck, ND

$6,755

15

Terre Haute, IN

$6,732

16

San Mateo County, CA

$6,721

17

Minot, ND

$6,719

18

Fort Worth, TX

$6,689

19

Ridgewood, NJ

$6,682

20

Beaumont, TX

$6,656

Where health care costs the least

These are the 20 regions that spend the least on health care, based on a composite of private, Medicare, and Medicaid spending.

1

Honolulu, HI

$4,184

2

Bloomington, IL

$4,392

3

Boulder, CO

$4,436

4

San Bernardino, CA

$4,685

5

Hinsdale, IL

$4,757

6

Tucson, AZ

$4,765

7

Olympia, WA

$4,768

8

Colorado Springs, CO

$4,777

9

Pueblo, CO

$4,799

10

Palm Springs/Rancho Mira, CA

$4,813

11

San Diego, CA

$4,841

12

Fresno, CA

$4,852

13

Springfield, IL

$4,864

14

Seattle, WA

$4,869

15

Reno, NV

$4,902

16

Evanston, IL

$4,914

17

Petoskey, MI

$4,919

18

Peoria, IL

$4,941

19

Montgomery, AL

$4,965

20

Mobile, AL

$4,976

How to reduce health care spending

This study shows that lowering health care costs won’t be easy, because America doesn’t have just one health care system. 

“There are basically three overlapping health care systems and they’re completely different,” Skinner says. 

Your costs can vary depending on who’s paying for your health care: private insurance, Medicaid, or Medicare. And your entire health care experience can change depending on where you’re getting treated. 

While Medicare and Medicaid cover many of your costs, if you have private insurance, the amount of health care spending in an area can affect how much you pay in premiums and out of pocket. Your health care costs could vary by thousands of dollars a year depending on your city, so  it may be something to consider when deciding where to live or work.

“You may want to think about whether you want to go someplace where health care is so expensive,” Skinner says. 

Image: Maskot / Getty

Corrections

No corrections since publication.

Author

Senior Reporter

Myles Ma

Senior Reporter

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Myles Ma is a senior reporter at Policygenius, where he covers insurance and personal finance. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

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