Hospital services most expensive part of U.S. health aystem

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Sep 26 2006

About 33% of every dollar spent on U.S. health care goes toward inpatient hospital care, according to a report by HHS's Agency for Healthcare Research and Quality, the Washington Times reports (Howard Price, Washington Times, 9/23).

The report is based on a U.S. database of inpatient hospital charges maintained by the federal government (Reuters, 9/22). In 2004, more than 60% of hospital bills were sent to federal and state governments for Medicare and Medicaid reimbursements, the study finds. The study also finds that in 2004:

Hospital bills totaled $790 billion, and $475 billion of that amount was billed to Medicare and Medicaid, excluding physician fees;
Medicare was charged $363 billion, or 46% of hospital bills, and Medicaid bills were $112 billion, or 14.1 % of hospital bills;
Hospital charges to private insurers totaled $252 billion, nearly one-third of all bills;
$44 billion, nearly 6% of total hospital bills, went toward treating coronary atherosclerosis, making it the most expensive condition to treat. Charges for atherosclerosis ranked No. 1 for Medicare, No. 7 for Medicaid, No. 3 for private insurers and No. 2 for the uninsured;
$41 billion, the second-highest total amount billed, went to hospital stays related to treating pregnant women and delivering babies. Newborn and mother stays were the two most expensive types of hospital stays for Medicaid; and
Schizophrenia was the fourth most expensive condition for Medicaid, while depression and bipolar disorder ranked fifth.

Although $790 billion for hospital stays was billed to payers, Caroline Steinberg, a trends analyst for the American Hospital Association, said "only $470 billion was actually paid to hospitals (for services provided), so there is a pretty big difference" between charges and reimbursement. The report states, "As health care costs rise and the population ages, policymakers are concerned with the growing burden of hospital-based medical care and expenses to government, consumers and insurers" (Washington Times, 9/23).

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.