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Out-of-pocket hospital costs high and rising, even if you have good insurance

Aug 12, 2016

For the first time, researchers show how much patients with private insurance actually pay for hospital stays. Out-of-pocket costs are high and rising fast for many plans, even those considered “good” insurance.

Emily Adrion is a research fellow at the University of Michigan medical school. She and her team looked at the rising out-of-pocket costs for people with private insurance.

Costs are rising in two main areas: deductibles and co-insurance.

To begin with deductibles, Adrion said they rose by around 86% between 2009 and 2013.

“The idea behind deductibles is to prevent overuse of healthcare,” Adrion said. “If you have a high deductible, you’re going to think twice before going to the doctor for something that may be unnecessary.”

But Adrion said whether insurance plans have a justifiable reason to raise deductibles is “a question mark right now.”

“A lot of people, instead of avoiding unnecessary care actually are avoiding necessary care as well,” she said.

Next is co-insurance – it’s the other area costing patients more right now.

“Co-insurance is actually the percentage of the cost of care that the patient is responsible for,” Adrion said. “If you go in for an appendectomy, the insurance company will pay about 70% and then your co-insurance means that you’re responsible for 30% of the cost of that care.”

She said not only are more people paying co-insurance now, but the size of co-insurance – the percentage – is also rising. It went up by around 33% between 2009 and 2013, Adrion said.

She said out-of-pocket costs, in total, are going up by 37%.

At the same time, premiums are also rising by around 5% a year. That means on top of rising co-insurance and deductibles, we’re paying more for our insurance too.

That means for the average person on an employer-sponsored plan, a hospital visit costs about $1,013.

To hear the full conversation, including what can be done to keep these costs down for families, listen above.

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Emily Adrion is a research fellow at the University of Michigan's Center for Healthcare Outcomes and Policy.

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