Private insurance prices for hospital care grew 47% more quickly than Medicare rates over seven years, KFF reported May 18.
Healthcare costs are a top concern for systems, patients and lawmakers, and prices vary across regions and hospitals and payers within those regions. High prices can result in higher premiums and cost-sharing obligations, as well as reduced wages for those with employer-sponsored health coverage, according to the report.
KFF used Bureau of Labor Statistics’ Producer Price Index data from April 2019 through April 2026 to analyze the changes in prices paid by private insurers and Medicare payment rates.
Here’s what to know:
1. Private insurance prices for hospital care rose 30% from 2019 to 2026, compared to 21% in Medicare rates.
2. Private insurance and Medicare grew at a similar pace from April 2019 to April 2020, then Medicare rates lagged behind from April 2020 to April 2025. In the last year, private insurance rates grew less quickly than Medicare rates.
3. Increases in private prices over time often reflects changes in the cost of providing care and bargaining power of hospitals relative to insurers. The increased consolidation of hospitals means one or two health systems control at least 75% of the inpatient hospital care market in 83% of metropolitan areas. This, along with an increase in labor and supply expenses during the pandemic likely contributed to the quick rise in prices.
4. In contrast, Medicare hospital prices are updated annually by CMS and are updated based partially on estimates of increases in hospital services input costs. The slowed pay rate growth could be due to policies and underestimated inflation in recent periods, according to the report.
5. National discussion on how to rein in hospital prices has often targeted hospital operations. Some policies aim to promote competition and reduce consolidation in the provider market, while others look to rein in prices directly by capping what a provider can charge.
At the Becker's 5th Annual Fall Payer Issues Roundtable, taking place November 2–3 in Chicago, payer executives and healthcare leaders will come together to discuss value-based care, regulatory changes, cost management strategies and innovations shaping the future of payer-provider collaboration. Apply for complimentary registration now.
