Commercial and private health care costs in the United States and West Virginia are rising at a concerning rate. West Virginia outpaces the nation with the highest health care spending of any state, comprising more than one-fourth of the state’s gross domestic product. A groundbreaking RAND Corporation study found that West Virginia residents bear the cost, as the Mountain State has private and commercial health care costs higher than any other state. In 2022, West Virginia spent about $6,000 per capita on hospital care, nearly $2,000 more than the national average, much of which fell on patients to pay.
READ THE FULL REPORT.
Many factors contribute to high health care costs in the United States and in West Virginia including an aging population; rising rates of chronic conditions; the costs of advancements in medicine, treatments, and technologies; and a fragmented health care system with many payers and limited regulatory enforcement. And recently, the impact of the increasing prevalence of concentrated provider networks became an emerging field of analysis for rising costs.
This report focuses on hospitals in West Virginia and how provider consolidation trends impact the state and consumers by reallocating market power to just a few hospital networks. Market consolidation is an important area of study for policymakers as well as consumers, as it directly impacts patients’ ability to afford care and services. Evidence shows that concentrated markets reduce the leverage insurers, employers, and individuals have to negotiate prices with providers to secure affordable care. This dynamic impacts consumers regardless of their insurance status, as even insured individuals and families absorb increases in health costs through higher premiums and out-of-pocket costs.
While hospital costs represent just one piece of the puzzle, they are worth examining as they represent about 30 percent of health care expenditures nationally and are the most consolidated part of the health care industry. Additionally, prices in the hospital sector have been growing faster than in any other sector of the economy. Between 2010 and 2023, national hospital care prices rose 36 percent—and much of these costs were passed on to patients. In West Virginia, hospital systems also own a range of clinics, including many primary care provider offices. Between this relationship with other clinics and with health insurance costs, hospital consolidation significantly impacts patients beyond the hospital setting.
One obvious solution to this information asymmetry is to simply make health care prices transparent so that people can compare costs and make the most informed decisions about their health care. And while that is essential, it only addresses part of the problem. Even if a person were able to see how much a specific service would cost them before they sought it, in many places, they still must accept that price because it may be the only option available to them.
This dynamic is a key consideration in rural areas like West Virginia, as researchers have found that hospitals that have no competition in a 15-mile radius have 12 percent higher prices on average than those with nearby competitors. A Yale University study found a statistically significant relationship between increased health care prices and suppressed wages and employment levels for workers both within and outside of the health care system. Increased unemployment driven by increased health care costs also had a causal relationship with mortality in the short term.
Please note: The data and analysis for this report was compiled prior to the passage of HR 1, the “One Big Beautiful Bill,” which will have deeply harmful impacts on West Virginians and the state’s health care system by reducing federal funding for health care, making Medicaid more difficult to access, and shifting significant health care costs onto the state budget and charitable entities including nonprofit hospitals. The findings of this report do not change the imperative of policymakers to reverse harmful funding cuts in order to ensure health care remains accessible in rural areas around the state. For example, in the report, we cite that the difference between the tax benefits nonprofit hospitals in West Virginia received and the amount of charity, uninsured, and uncompensated care they provided totaled $132 million in a single year, enough to completely cover the medical debts of 77,000 West Virginians or the state’s rural hospital losses 13 times over. That amount is still less than one-sixth of the amount of federal health care funds West Virginia will lose once HR 1 is fully phased in. Policymakers should work to implement the policies outlined in this report as they work to mitigate and reverse the deep, harmful cuts in HR 1.
READ THE FULL REPORT.
