It’s no secret that healthcare costs are out of control. But the mystery is the costs themselves.

Today’s healthcare industry has a serious lack of consistency when it comes to how much care should cost—and employers and their health plan members are stuck paying the outrageous prices with little to no choice in the matter.


Even without COVID-19, healthcare costs are on the rise—slated to be nearly 20% of GDP by 2027. Employers desperately need better resources and support to push back on profit-driven prices to control healthcare costs while directing members to seek out quality (and affordable) care.

We’re also faced with the impact of COVID-19 on healthcare costs—the true impact of which we likely won’t see until next year. However, we already know that costs associated with treatment vary widely, from hospitalization to long-term treatment and pharmaceuticals.

While we can’t forecast the true impact of COVID-19 on healthcare costs just yet, we did take a look at a similarly impactful respiratory disease: pneumonia.

We analyzed hospital data to see how much it actually costs a hospital to treat pneumonia and compared it to what’s being charged. Spoiler alert: hospitals are really padding those bills.

On average, it costs $10,110 to treat pneumonia in the U.S.; Medicare’s average national reimbursement rate is $10,000.

The average hospital bill? $40,911, or 400% more than the cost of care.

Here’s a look at 5 states with the highest inpatient cost-to-charge ratios for pneumonia in the nation:

  • Nevada – 706%
  • New Jersey – 663%
  • Florida – 611%
  • Alabama – 509%
  • Texas – 503%

Medicare rates are based on the cost of care, resulting in a reimbursement that’s designed to cover the services, tools and personnel required to deliver care.

But because the healthcare industry lacks transparency into pricing, many employers simply aren’t aware of just how much is getting tacked on to the bill (or, worse, what the line items on the bills actually are).

Healthcare should be more than just making a (few thousand) bucks off the backs of sick people. It should be about better health outcomes, quality care and fair pricing.

As opaque as prices can seem when it comes to care, employers and members have more options than they realize.

Want to see what it costs to treat pneumonia near you? We’ve pulled down the data for five major metro areas. Get in touch with us to see the stats for the city nearest you.

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