A research team from Rice University reports that technology costs, rather than care for the uninsured, will be the likely source of health care cost increases in the state of Texas, a find they say runs contrary to the public perception of health care costs.
The research was led by Vivian Ho, a professor of both economics and medicine, who reported the finding in the journal Healthcare Management, Practice and Innovation.
"This misconception has distracted policymakers and workers in the health care sector from identifying effective strategies for cost control," she said, adding that more than half of the observed price increases can be explained hospital, patient and market characteristics.
For her study, Ho analyzed data on revenues by payer type to identify the factors for rising hospital costs in Texas between 2000 and 2007.
The study comes amid a marked rise in health care costs in the US, accompanied with sharp increased in fees that hospitals receive for treating privately-insured patients.
"We discovered that approximately two-thirds of the increase in prices can be explained by increases in the costs of care, which may reflect the growth and use of more advanced technology," Ho said. "Part of this cost increase could also be attributable to sicker patient populations, as patients with less severe conditions are increasingly treated in freestanding facilities. We found no firm evidence that hospitals are raising prices in response to lower reimbursement from Medicare, Medicaid or uninsured and self-pay patients."
Ho said the results suggest more attention should be paid to understanding hospital care costs.
"If technology growth is behind the cost increases, then greater efforts should be devoted to determining which technologies are cost-effective," Ho said. "Greater thought could also be devoted to designing reimbursement mechanisms that discourage inefficient use of new technologies."