RAND 5.0 Reveals Illinois Hospital Prices Remain High; Prices Vary Widely Among Nearby States

MADISON, WI. (May 13, 2024) – Hospital prices remain high across the country, including in Illinois, according to the RAND Corporation’s fifth update to its national Hospital Price Transparency Study. 

To summarize hospital prices and make them easier to interpret, the study uses Medicare reimbursement amounts as a benchmark.  

In 2022, the relative prices that Illinoisans paid for hospital services averaged 247 percent of what Medicare, the government-backed health insurance plan for people mostly 65 or older, would have paid for the same services.  

Across all states, the average prices were 257 percent of Medicare.  

Illinois hospital prices were ranked 32nd among states in the study. This was lower than nearby states such as Wisconsin (318%) and Indiana (297%), but higher than states such as Minnesota (238%), Michigan (192%), and Iowa (185%). 

“RAND 5.0 sheds critical light on the variations in hospital prices within and across states,” said Melina Kambitsi, Ph.D., Senior Vice President of Business Development and Strategic Marketing at The Alliance.  “Transparency efforts like this are incredibly important for employers and policymakers to gather the information they need to make informed decisions that will improve healthcare for everyone.”   

Key Findings 

• There is variation between providers for comparable services. The discrepancy is not the result of differences in quality or cost-shifting. Rather, it is the result of a lack of transparent pricing and consolidation in the healthcare market. 
• Prices also vary widely at different sites of care. The most cost-effective being telehealth and office visits, mid-level being urgent care, and most expensive being emergency care and hospital services.   
• Facility inpatient prices averaged 242 percent of Medicare, while facility outpatient prices averaged 288 percent, and affiliated outpatient professional fees averaged 190 percent during the same period. 

Empowering Employers through Transparency  

“As the primary source of health insurance coverage and one of the largest purchasers of healthcare, employers bear a fiduciary responsibility to efficiently allocate plan dollars and ensure efficient access to care,” stated Kambitsi. “This study underscores the crucial role of price transparency in enabling employers to steer employees towards high-quality, cost-effective care providers. Armed with this data, employers can foster collective bargaining power, advocate for fair pricing, optimize benefit design, and ultimately, fulfill their fiduciary duty. At The Alliance, we use data to help employers guide their employees towards providers that offer high-quality care at lower prices.” 

The Alliance will host a webinar June 12, featuring RAND study contributor Chris Whaley, an associate professor at Brown University, to delve deeper into the report.  

The webinar will provide key insights on hospital pricing and analysis in Wisconsin and Illinois, including comparisons with national rates, variations among hospitals, and the relationship between price and quality of care. The session will also go into how these insights can empower employers to make effective healthcare purchasing decisions. 

Register at the-alliance.org/rand 

To read the report, visit rand.org/health-care/projects/price-transparency.html 

About RAND Corporation 

RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer, more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest. To learn more about RAND, visit www.rand.org. 

About The Alliance 

The Alliance serves as the voice for self-funded employers who want more control over their healthcare costs. Using Smarter Networks and sophisticated data mining and analysis, they provide transparent, creative approaches to network and benefit plan design to unlock savings where others can’t – or won’t. The Alliance remains a trusted, objective partner for its 425+ employers and their brokers who seek improved access to high-quality healthcare by contracting with a network of 39,000 healthcare providers and doctors across the Midwest.