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Report finds insurers pay higher prices for medical procedures in Minnesota

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Having your knee replaced in Minnesota may cost your insurance company a lot more than if you had the same surgery done in Florida, according to a new analysis by the Health Care Cost Institute.

The non-profit group looked at insurance claims for more than 200 medical procedures in the 41 states where the data were available (plus Washington D.C.) and found big variations from one state to another.

When the costs for the services were averaged, Minnesota had the fifth highest prices, trailing only Alaska, New Hampshire, North Dakota, and Wisconsin.

The study's authors – including Steve Parente, an associate dean at the University of Minnesota – wrote about their findings in the journal Health Affairs. Their complete report is available here.

The analysis compared what health insurers pay for services ranging from mammograms to MRI scans to cataract removal.

The Business Journal notes that for 100 of the 221 procedures Minnesota paid at least 50 percent more than the national average.

Why the discrepancies between states?

There seems to be no simple answer to that – although we like the way National Public Radio put it: "The takeaway? Health care prices are crazy."

Zach Cooper, a professor of health policy and economics at Yale University, tells NPR that when it comes to health care "the market just isn't working."

The network says past thinking was that states where consumers use fewer medical services should have lower costs. But according to the study that's not the case in Minnesota and Wisconsin.

Cooper says one factor may be the consolidation of hospitals that has reduced competition.

Criticism of the study

In Minnesota the Institute's researchers used data from four insurers: Medica, UnitedHealth Group, Aetna, and Humana.

Doctors and hospitals told the Star Tribune those insurers have too small a share of Minnesota's health insurance market for the analysis to be useful.

An official with the Minnesota Hospital Association told the paper those insurers don't get the best discounts from health care providers because they don't represent enough patients.

USA Today notes that the analysis does not break down prices by doctor or hospital. The newspaper says the Health Care Cost Institute gets much of its funding from the insurance industry.

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