WV among states where hospitals charge commercial insurance plans the most, study says

West Virginia hospitals charge commercial insurance prices that are among the highest in the United States, according to a report released Thursday.

According to the report, West Virginia hospitals charged on average prices that are 337% of the rate that Medicare charges for the same services. Only two states — Florida and South Carolina — have higher prices.

The report, from healthcare consumer advocacy organization Families USA, analyzed financial data and commercial insurance prices for more than 2,800 hospitals in 49 states and Washington, D.C., from 2018 to 2023 and came up with each state's weighted average commercial price.

"This report adds to decades of literature that detail how big hospital chains have become big business in America," Families USA director Anthony Wright told reporters during a virtual briefing Wednesday. "The health systems incentives for corporate health systems are to get bigger, not to get better. As a result, healthcare consumers, primarily the more than 182 million with commercial coverage, are paying the price — around three times what Medicare pays for the same set of services."

Ellen Allen, executive director of West Virginians for Affordable Health Care, said that consolidation — particularly by West Virginia's two largest healthcare systems — contributes to the high prices.

"We've had this great consolidation over the last decade, primarily by WVU Health Systems and Vandalia Health, and that has driven up costs because there's fewer choices," Allen said during the briefing. "And it's made rural healthcare much more expensive and inaccessible."

The report says West Virginia hospitals had an average annual net income of more than $14.1 million per hospital for 2018 through 2023.

West Virginia is one of the most consolidated states when it comes to healthcare systems, Alicia Camaliche, senior policy analyst for Families USA and one of the authors of the study, told reporters.

Five of the largest health care systems in the state control 89% of hospital care delivered, and three of those systems control 84% of care delivered, she said.

"That speaks massively to the market power these big systems have to set prices and directly correlates to having some of the highest prices in the country," she said.

Healthcare finances are 'complicated'

Jim Kaufman, executive director of the West Virginia Hospital Association, said healthcare finances are complicated. In the average West Virginia hospital, three out of four patients are covered by a government health care program — West Virginia Public Employees Insurance Agency, Medicaid, or Medicare — which pay providers less than the cost of care.

Medicare, the program that's used to compare the cost of services, pays less in West Virginia than in other states because the program is based on cost of living, Kaufman said. That does not include the cost of pharmaceuticals and medical equipment.

According to the study, authors took into account Medicare's local wage indexes.

Kaufman also pointed to a study from Kaiser Family Foundation that found that West Virginia was among the 10 states with the lowest hospital expenses per day, "which shows we're actually doing a great job of holding down costs," he said.

"Now the challenge is … we lead the nation in obesity rates, tobacco rates, diabetes," Kaufman said. "I mean, we have lots of healthcare issues, and we have an older population, so we actually see utilization of healthcare services higher than other states that are healthier."

One of hospitals' challenges is filling vacancies — the state's hospital systems currently have more than 4,000 openings for nursing, respiratory imaging and laboratory jobs alone, he said. There are more than 125,000 vacant nursing positions nationwide, he said.

West Virginia having a higher percentage than average of government payers, which pay less than insurance plans, means hospitals have fewer resources to pay competitive salaries, he said.

"So when you think about healthcare costs, yes, to compete and keep that nurse or doctor or respiratory therapist in West Virginia, we need to offer competitive salaries, but that also means healthcare costs are higher," he said.

He compared hospitals' business model to that of a body shop that has to operate 24 hours a day, seven days a week in case of an accident.

"We've got to pay for things to be operational 24 hours a day, seven days a week, regardless of whether it's being utilized, just in case," he said. "Because if you're in an accident, at two o'clock in the morning, you want that emergency room there. But you only get paid when it's getting used. So there's a high amount of standby cost built in."

Hospitals do lots of community benefit programs like diabetes education, farmers markets, pharmacy programs and other efforts to help people get healthier and be less dependent on hospital services, he said.

The state's largest healthcare systems are Vandalia Health — with 17 hospitals across the state, and West Virginia University Health System, with 25 hospitals across West Virginia, Ohio, Pennsylvania and Maryland.

Marshall Health — also among the state's largest health care systems — has 130 clinic locations across West Virginia, Ohio and Kentucky.

A spokesman for Vandalia Health said in an email that 81% of payors are governmental — such as Medicare, Medicaid and PEIA.

"In West Virginia, commercial payors must cover the low reimbursement rates of governmental insurance. Therefore, the cost shift may be higher compared to other states," the hospital system said.

Commercial insurance prices are negotiated between healthcare systems and insurance companies. Kaufman said the state's largest insurer — Highmark Blue Cross Blue Shield — controls 80% of the market for commercial insurance in West Virginia.

"So if you think about it, who's got more market leverage, the insurance company or one of the three healthcare systems?" Kaufman said. "Because none of those healthcare systems can operate without working with Highmark. And I think that's something the report leaves out. When you really look at consolidation, the health insurance market has a lot of market leverage, much more than any hospital would ever have."

Organization pushes for reforms

The report comes more than a week after Congress's Ways and Means Committee questioned hospital executives from for-profit and non-profit healthcare systems about the rising costs of healthcare.

"Simply put, hospitals are charging an insane amount for care," Ways and Means Committee Chairman Jason Smith, R-Missouri, said in his opening statements. "Hospital prices have skyrocketed 300 percent in just over two decades — more than any other sector of our economy.

"Hospital consolidation and mergers, that lead to ever-growing market power, are fueling the borderline extortionary prices hospitals charge patients," he said.

Families USA called on Congress to act to lower healthcare costs by implementing "bipartisan reforms" like enacting site-neutral payments — which would require the same rate for medical services regardless of where they're performed, mandating full transparency, banning anti-competitive practices, strengthening oversight of nonprofit hospitals and limiting hospital prices or hospital price growth.

"Ultimately, these policy reforms would directly curb excessive prices, boost competition and deliver meaningful cost relief for American families," the organization wrote. "Failing to advance hospital pricing reforms would only continue to force healthcare consumers to bear the brunt of our overcharge for care and generate financial windfalls at consumers' expense."

Changes coming to healthcare

The One Big Beautiful Bill Act will change much of the landscape for hospitals in West Virginia and throughout the country. Beginning in January, states are required to implement work requirements for people who are on Medicaid as a part of the expansion population — those who qualify for the program based on their income as a provision of the Affordable Care Act.

State health officials have said they expect Medicaid enrollment to decline when work requirements are in place. One study estimates between 40,000 and 75,000 West Virginians will lose their Medicaid coverage in 2028 under the work requirements and more frequent eligibility checks.

"We're very concerned about how those requirements in the Big, Beautiful Bill will change Medicaid enrollment and more individuals will lose their healthcare coverage, which means higher uncompensated care for the hospitals," Kaufman said. "How much more, we don't know."

The loss of the premium healthcare tax credits that helped people pay for insurance plans on the federal government's Health Care Marketplace will also result in more uncompensated care for hospitals, he said. At least nearly 10,000 fewer West Virginians signed up for the healthcare plans this year.

The One Big Beautiful Bill Act will also cut the Medicaid directed care program resulting in West Virginia hospitals losing $1 billion each year when the bill is fully implemented, he said.

Allen, the director of West Virginians for Affordable Health Care, said changes in the One Big Beautiful Bill are a "perfect storm" to add more stress to the state's healthcare system and West Virginians across the board.

"Whether or not you're on unemployment based healthcare, we're going to see costs rise there, whether or not you're on (a plan through) the (Affordable Care Act), Medicaid, I just think we're going to see uninsured rates continue to rise," Allen said.