Minnesota Health Care Costs Continue Post-Pandemic Rebound With 7% Increase in 2022

New report highlights cost trends and variation for people with private health insurance

MINNEAPOLIS – NOVEMBER 30, 2023

A new report from MN Community Measurement (MNCM) finds that the cost of health care services for people with private health insurance increased by 7.0 percent in 2022 in Minnesota. The report highlights cost and utilization trends by type of health care service as well as variation by region within Minnesota and by medical group. MNCM is an independent non-profit that serves as an objective, trusted source of information on Minnesota health care quality, cost, and equity.

The report, Health Care Cost & Utilization in 2022, analyzes data for about 1.2 million people with private health insurance and nearly $10 billion in health care spending in 2022. Detailed analysis for 102 medical groups is available through a set of appendix tables to the report.

Key Report Findings

• Statewide, the total cost of care (TCOC) for people with private insurance increased by 7.0 percent per person in 2022. Growth in 2022 was slower than the 12.5 percent experienced in 2021, much of which likely represented “catch-up” back to normal levels of service utilization following pandemic declines. The most recent 3-year average growth rate was 5.5 percent, which was higher than the average annual growth of 4.9 percent from 2014 to 2019.

• Costs grew fastest in 2022 for prescription drugs (17.1 percent per person). The slowest rate of growth was for inpatient hospital services, which increased by 0.4 percent. Costs for outpatient hospital services and professional services grew by 8.3 percent and 4.3 percent, respectively.

• Costs per person with private insurance vary substantially by region of the state. The lowest cost region in 2022 was St. Cloud, with costs 8.8 percent below the state average due primarily to lower use of services but also lower prices. The highest cost region was Rochester, with costs 37.4 percent above the state average, due to higher prices. The regional analysis is based on where patients live, not where they receive services.

• For most service types, utilization continued to rebound in 2022 from declines experienced during the COVID-19 pandemic. Among service categories analyzed for this report, outpatient surgery had the largest increase at 8.0 percent.
  • One exception to the trend of increased utilization was inpatient hospital admissions, which showed a 4.3 percent decline in 2022. Inpatient hospital admissions are the only category of service included in the report with utilization that remains below pre-pandemic (2019) rates for patients with private health insurance.

• The report also sheds light on variation in prices for individual services. For example, in 2022 the cost for a chest x-ray ranged from $49 to $348, depending on where the service took place. The prices paid by private health insurance are substantially higher than other insurance types. For example, in 2022 private health insurers paid just over double Medicare reimbursement rates for a basket of comparable services that has been tracked over time by MNCM. The gap between private insurance and Medicare rates has been increasing over time.

“The analysis in this report is a powerful source of information about trends and variation in health care costs and utilization across Minnesota,” said Julie Sonier, MNCM President and CEO. “With this data, we can better understand health care cost trends at the statewide, regional, and medical group levels, including how differences in use of services and differences in prices contribute to this variation.”

Methodology

This report is based on analysis of claims data for 2022 from Blue Cross Blue Shield of Minnesota, HealthPartners, Medica Health Plans, and Preferred One. The analysis used the nationally-endorsed Total Cost of Care methodology developed by HealthPartners. Patients are attributed to medical groups based on where they receive the majority of primary care services. For analysis at the regional and medical groups levels, the data are risk-adjusted and high-cost outliers are truncated. More details on the methodology are available in the report.

Importance of Measurement

Measuring and reporting on health care cost, utilization, and quality helps consumers understand how care varies across providers, allows providers to identify improvement opportunities and how their measures compare to others, and helps health plans and other purchasers better understand and improve value for money that is spent on health care.

“Minnesota is unique in the capabilities that we’ve built to measure and report on a robust set of measures related to health care cost, utilization, quality, and disparities,” said Sonier. “Having a common set of priorities and common set of data have been huge assets to our state in focusing efforts to drive improvement.”