Dollars and Sense: The True Costs of Care

When headlines claim North Carolina has the most expensive health care in the country, it’s natural to panic, or point fingers. But the real story is more nuanced, and the price we pay isn’t always the price it costs to provide care. 

There are two primary factors that influence our overall understanding of health care costs: 

• The cost of purchasing health care: What consumers pay, such as health care premiums, deductibles, co-pays, and co-insurance amounts. 

• The cost of providing health care: What providers pay for doctors, nurses, and support staff, to operate a facility, equipment and supplies costs, etc. 

While the two are inextricably linked, they may not align. A closer look at the data reveals a different story than the one grabbing headlines.  

A Forbes article published this January ranked “North Carolina as the most expensive state for healthcare.” Before you pack your bags to seek health care services in another state or blame your health care provider, you should know the article was based on consumer costs.  

The ranking focused 75% of the scoring on employees’ out-of-pocket insurance premiums and deductibles within their healthcare plan – that’s the employee’s portion of their premium compared to their employer.

Is it true that North Carolinians are paying more for health care than their neighbors in other states? Yes. But does that mean that the cost to provide health care is equally high? No, not even close. 

A new white paper dives deeper into the data behind the Forbes report but looks at both sides of the equation – consumer and provider costs – to paint a clearer picture. It can help explain where the real problem is for North Carolina and how lawmakers can fix it. The report is eye-opening: 

• North Carolina ranks 10th lowest in per capita health care spending.  

• For hospital care – typically the most expensive setting – North Carolina ranks 13th lowest in net price per inpatient discharge. 

  
  

Bottom line: providers are keeping costs down. State lawmakers should be celebrating providers’ cost control efforts and listening to them as trusted partners on policy solutions that would further benefit their patients – like prior authorization reform. 

One would expect that these savings would be passed on to the consumer. However, providers do not control how costs are passed down to patients by employers and insurers, so North Carolinians are still paying more than they should.  

Even though total premiums are among the lowest in the U.S. (11th lowest for both single and family coverage), employees here bear a disproportionate share. Only plus-one coverage breaks the trend, ranking 11th highest. This is something lawmakers should be shouting from the rooftops (or at the very least, highlighting in their bills).  

Here's the rub: While total premium costs are low, the share of the premium cost to the consumer is high. As the white paper explains, North Carolina employers routinely shift the burden of the premium on to their employees, making North Carolina employers some of the least generous in the country. 

The issue isn’t provider costs – it’s cost-sharing choices by employers and insurance companies. And it matters, because the loudest voices in the policy arena aren’t always the most accurate. 

Lowering health care costs is complex and deserves our attention. We need careful and transparent analysis to hold all the players in the system – insurance companies, the pharmaceutical industry, providers, employers, and, yes, even lawmakers, accountable for their part of the problem. Until then, industry-influenced “analysis” will bolster special interest groups’ own interests, not those of everyday North Carolinians who want to see a doctor when they need to, afford their medications, and not pay an arm and a leg for health insurance.  

Given that some of our lawmakers are legislating off headlines and pointing the finger at providers, let’s propose a more honest one: North Carolina employees pay some of the highest rates for health care coverage in the nation despite overall health care costs being among the lowest.   

That’s the real headline. Now let’s build policy that reflects it.