Scuttlebiz: Augusta area health care prices 5% below national median

Sep. 19--I'm sometimes hesitant to write about how metro Augusta is a "low cost" market.

I have this nagging (and admittedly irrational) fear that drawing attention to the region's relative affordability will encourage local providers of goods and services to raise prices. Or attract California refugees.

But the focus of this week's column is a business where consumers already have little to no say in prices: health care.

The good news for the Augusta-Aiken metro area is that researchers at the Washington, D.C.-based Health Care Cost Institute have found health care prices here are 5% below the national median.

And this was despite area residents spending 1% above the median on a common set of medical services when compared with 123 other metro areas, according to the nonprofit research group's Healthy Marketplace Index, which analyzed more than 2.4 billion claims filed by employer-backed insurance claims nationwide between 2013 and 2017.

"Health care spending is rising almost everywhere, but the way in which it is rising depends on where you look," Niall Brennan, the institute's president and CEO, said in a statement. "Is health care spending in the Augusta area being driven by hospitals, outpatient care, physicians or all three? The Healthy Marketplace Index is a major step forward in making information about local area health care spending more simple and transparent."

There's a ton of data to unpack here, so I'll do my best to divine the report.

It appears hospital costs are the main reason for our market's low prices: metro Augusta's inpatient costs were 11% below the national median, while outpatient costs were 6% lower.

The only category in which metro Augusta exceeded the national median was for "professional" services -- non-facility claims that include bills for office visits, lab tests and immunizations. Those costs were 2% above the national median.

Interestingly, the metro area's service mix index -- a gauge of whether more or less expensive services were used -- was 12% above the median. The finding could indicate metro Augusta's overall low prices encourage utilization of more expensive services (which might explain our 1% above-median spending).

For comparison purposes, metro Augusta's below-median prices put it in the same category as Cincinnati, Pensacola, Fla., and Allentown, Pa.

Metro Atlanta, a market nearly 10 times Augusta's size, had overall health care prices 5% higher than the national median. Savannah, the only other Georgia market the institute analyzed, was near the top of the list with prices 13% below the median.

Overall, Augusta-Aiken's health care costs rose 7% during 2013-2017, which is 2% above the national median. On a scatterplot graph, metro Augusta is near the middle of the dot cluster. The big outliers are Anchorage, Alaska, where prices rose 9% during the four-year period; and Wichita, Kan., where prices actually decreased 8% during the same time period.

Most metros, about 62%, fell within 10% of the national median on overall health care prices, but several markets, including the California cities of San Jose and San Francisco, were sky high, with prices that were 67% and 64% higher, respectively, than the median.

Little Rock, Ark., had the lowest overall prices, coming in at 26% below the median. In other words, health care prices in San Jose are more than two times higher than Little Rock.

Let's get back to metro Augusta for a moment. The institute's analysis found metro area residents sought health care services at a rate 7% below the median, which suggests those with employer-sponsored health insurance plans aren't over-utilizing medical services (perhaps no surprise considering nearly half of America's workforce is enrolled in "high-deductible health plans," which policy analysts say encourage workers to cut back on needed -- and unneeded -- care).

The institute's report shows our hospital market is comparatively competitive, with a "Herfindahl-Hirschman Index" score of 2,506 (0 represents perfect competition, while 10,000 is a monopoly). Riverside, Calif., had the high-end score of 693, while Peoria, Ill., was at the bottom with a 7,871.

Aside from two VA hospitals, an on-post medical center at Fort Gordon and several specialty hospitals, metro Augusta boasts four health care systems with acute-care facilities: University Hospital, AU Medical Center, Doctors Hospital and Aiken Regional Medical Center. There used to be five until Trinity Hospital of Augusta was acquired in 2017 by University Hospital, which converted the 231-bed facility into its Summerville campus.

About 82% of metro residents sought health care services within the metro area. Of the 18% who went elsewhere, Atlanta was their top destination.

The institute's data is based solely on employer-sponsored health plans, which cover about 49% of all Georgia adults. While the study didn't address the metro area's health insurance market, a 2018 report from the American Medical Association showed that Blue Cross Blue Shield-affiliated plans account for nearly 60% of the area's privately insured residents.

That kind of bargaining power puts a substantial amount of price pressure on providers, which might explain our below-median costs. I suppose I'd feel better about insurance companies keeping provider reimbursements at bay if my premium costs didn't increase every year.

But whaddya gonna do, eh?

Bottom line: Metro Augusta's health care market is fairly healthy from a consumer perspective. And that's a good thing, considering the health care industry employs about 30,000 people -- more than one out of every 10 local workers, according to 2019 data from the federal Bureau of Labor Statistics.

If you find this topic interesting, you should check out the Health Care Cost Institute's Healthy Marketplace Index website. It is quite impressive. In fact, the Robert Wood Johnson Foundation-supported project has been a finalist for multiple awards, including the National Institute for Health Care Management Digital Media Award.

You might just see health care in a whole new light. Or you could stream the new "Cobra Kai" series on Netflix.

Whatever floats your boat.

HOAM ON THE RANGE: While we're getting geeky with local price data, we might as well take a look at what the Federal Reserve Bank of Atlanta's Home Ownership Affordability Monitor, or HOAM, says about Augusta.

The Atlanta Fed's recently released data for June shows metro Augusta's three largest counties -- Richmond and Columbia on the Georgia side and Aiken in South Carolina -- all fall in the "affordable" range.

The HOAM index works like this: A number below 100 indicates a median-priced home is unaffordable to a median-income household at current interest rates. A number above 100 indicates the opposite.

All three metro counties -- individually and combined -- were above the national HOAM index of 93.13 in June, which was the third month in a row the number was below 100. The national index showed home ownership costs amounted to 32.2% of annual median income, which exceeds the 30% affordability threshold set by the Department of Housing and Urban Development.

The Augusta-Aiken area's June index was 133.8, based on a median income of $54,335 and a median-priced home of $189,350. That works out to ownership costs that consume only 22.5% of annual income.

The index gets interesting when you drill down to the county level. The county with the most expensive homes, Columbia County, scored highest on the affordability index while the county with the least expensive homes, Richmond County, scored the lowest.

Turns out, it's all about the income. Columbia County's 172.7 HOAM index is due in large part to the county's median income of $84,979, which is a mere 17.4% of the Benjamins needed to pay the bills for the county's median priced home of $224,333.

The next highest scoring part of the metro area, Aiken County, had an index of 142.6. That was based on a median income of $53,151 and a median home price of $181,800. The income-to-price figure works out to 21%.

Richmond County was still in the affordable range with a HOAM index of 126.3, but its median income of $39,773 meant that 23.8% of your take-home pay would be needed to afford the median-priced home of $139,663.

The Augusta-Aiken metro area has been above the 100 mark since 2014. Its highest index was 139.3 in June 2016; its lowest was 121.8 in July 2018.

Two Southeastern markets, Durham-Chapel Hill, N.C., and Charleston-North Charleston, S.C., were in the top three markets seeing the sharpest downfall in home affordability, with declines of 7.4% and 7.1%, respectively, because of double-digit percentage increases in home prices during the past year.

In case you're interested, the most affordable metro area in the U.S. with a population over 500,000 was Toledo, Ohio, with an index of 165.7; the least affordable large metro area was ... you guessed it: San Francisco, at 54.3.

In fact, only two of the top 10 least affordable markets were not in California.

Those high-cost markets obviously have an out-sized impact on the national index, because only 19% of metro areas were below 100. The vast majority, 81%, cleared the 100 affordability hurdle.

I see four takeaways here: 1) Homes are relatively affordable in metro Augusta if you earn a median kind of wage and live in a median kind of house; 2) You can get an outstanding home in any metro county if you have a high-paying job; 3) Affordability ebbs and flows in the metro area, but has been consistently above par; and 4) Don't move to California unless you're rich or are OK with living in a rented storage unit.

AND FINALLY, A WORD ON WAGES: The Bureau of Labor Statistics' latest Area Economic Summary for the metro Augusta area has some surprising -- and some not-so-surprising -- data.

Let's start with what you probably already know: The COVID-19 pandemic has sliced jobs like a Benihana chef butterflying shrimp on a Friday night.

Total non-agricultural employment in July fell 5% compared with July 2019, with seven of the metro area's 10 major employment sectors posting job losses. The biggest casualty was the leisure and hospitality sector, which was down 6,200 workers, or 22.7%, during the month. No surprise there -- bars, restaurants, hotels and event halls have had to pare back staffing as the pandemic continues to keep people from going out and about.

Two of the three sectors that didn't lose jobs actually saw employment gains during the month: mining, logging and construction employment increased by 1,000 jobs, or 5%; while the government sector gained 1,500 positions to log a 3.4% employment increase. Manufacturing showed neither a job loss nor gain during the month.

The sunny side of the report is that metro Augusta's job losses are not as severe as the rest of the nation. The U.S. unemployment rate for the month was 10.5% compared to our 7.3% average for all seven counties in the metropolitan statistical area.

Richmond County's unemployment rate was the highest, at 9.5%; Columbia County's was the lowest, at 5%.

That's somewhat interesting considering the average weekly wage for all industries for Richmond County is $934 compared with Columbia County's $755. One can infer a large portion of Richmond County's higher-paying jobs are held by residents of Columbia County, an area with lots of homes but few high-wage jobs.

But hold on: Guess where the metro area's highest weekly wages are? Burke County.

According to the economic summary, weekly wages in the sparsely populated and mostly rural community are a whopping $2,055. I suppose it helps having thousands of union construction workers building two new reactors at Plant Vogtle.

Aiken County, the metro area's second most populous county, had the second highest weekly wages, at $1,014. The payroll for Savannah River Site's 10,000-employee workforce no doubt has a hand in that.

All in all, there were 12,000 fewer jobs in metro Augusta in July than there were during the same month last year.

Thanks, China.

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