7 States With the Highest Health Care Costs

While many focus on the cost of health insurance premiums, relatively little media attention is being given to the actual cost of health care itself. According to the latest data available from the Centers for Medicare and Medicaid Services, or CMS, the annual cost of health care in the U.S. (excluding insurance premiums) is $6,815 per person. Depending on where you live, though, the costs could be much higher. 

CMS gathers data from all types of health care providers -- hospitals, physicians, nursing homes, and other providers. It also collects information regarding spending on medical products including prescription drugs, over-the-counter medicines, eyeglasses, and hearing aids, among others. Based on the agency's analysis, here are the seven states with the highest health care costs of all.

7. Rhode Island
The smallest state in the U.S. by geographical size doesn't have equally small health care costs. Rhode Island's per-capita health care spending of $8,309 is nearly 22% higher than for the nation as a whole.

6. New York
One of the nation's largest states in terms of population also spends large amounts on health care. New York residents spend $8,341 on health care per capita. This amount is a little more than 22% higher than the U.S. figure.

5. Delaware
Delaware's state motto is "Liberty and Independence," but citizens of the state don't have as much liberty or independence from high medical costs as many of their fellow Americans. The state's $8,480 health care spending per capita ranks more than 24% higher than that of the entire U.S.

4. Maine
Maine is known for its lobsters, but its medical costs might have even bigger claws. Residents spend $8,521 per person on health care -- 25% higher than Americans as a whole. 

3. Connecticut
Connecticut claims the third-highest median household income in the U.S. but also ranks No. 3 in the nation for health care spending. The state's $8,654 per-capita figure amounts to nearly 27% more than that of the entire country. 

2. Alaska
Alaska is near the top of the planet -- and near the top in health care spending for the nation. Alaskans spend around $9,128 per person on health care. That's almost 34% higher than the figure for the U.S.

1. Massachusetts
Massachusetts ranks as the biggest spender when it comes to health care. The state's $9,278 per-capita figure is a whopping 36% higher than that of the entire country. While some might point to "RomneyCare" as the culprit, it's not. Massachusetts ranked near the top well before the legislation was enacted. We should also note that the District of Columbia, which isn't technically a state, comes in even higher with $10,349 per capita in health care spending.

Follow the money
Motley Fool readers know that we're always looking for the investing angle with any story. Is there one here? Let's follow the money to see if investors might be able to profit.

The biggest component of health care spending for all of these states by a wide margin is on hospital care. Here's how the states stack up against each other and the U.S. as a whole on hospital spending per capita.

Source: Centers for Medicaid and Medicare Services. 

Could publicly traded hospitals that have a heavy presence in these states be good investing choices? Scratch HCA Holdings (NYSE: HCA  ) off the list. The nation's largest hospital chain operates 162 hospitals, but only one of them is in any of the seven states on our list.

Community Health Systems (NYSE: CYH  )  counts 135 hospitals spread across 29 states in its fold. Like HCA, though, only one of Community's hospitals is located in a state among those with the highest medical costs.

Health Management Associates (NYSE: HMA  ) operates 71 hospitals in 15 states. None of them are in the states mentioned earlier. What about Tenet Healthcare (NYSE: THC  ) ?  Tenet has 49 hospitals -- with a grand total of zero in our list of states.

All of these hospital stocks have served investors quite well over the past year, though. Community Health, HMA, and Tenet have more than doubled, while HCA shares are up "only" 53%.

CYH Chart

CYH data by YCharts.

These impressive gains stem largely from the perceived impact of Obamacare. The expectation is that hospitals' financials will improve as more currently uninsured patients obtain health insurance.

Could these hospitals have done even better if they operated in the states on our list? Probably not. That's because five of the seven states with the highest medical costs also are in the top 10 list of states with the highest cost of living. More money might come in, but more money would also likely go out due to higher costs.

Statistics and the truth
All of this reminds me of a quote attributed to George Canning: "I can prove anything by statistics except the truth." These seven states do statistically have the highest per capita spending on health care. However, these numbers in isolation don't allow us to draw any firm conclusions about why the spending is higher. 

If you live in Massachusetts, Alaska, or the other states, you're spending more on health care than many Americans. You're probably also spending more on plenty of other goods and services. On the other hand, there's a good chance you make more money also. When we follow the money, we need to follow all of the money.

Regardless of which state you live in, Obamacare will impact you. How will the legislation impact your health care costs? The Motley Fool's new free report, "Everything You Need to Know About Obamacare," lets you know how your health insurance, your taxes, and your portfolio will be affected. Click here to read more. 


Read/Post Comments (20) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 07, 2013, at 12:44 PM, jodigirl2 wrote:

    Can you please share the link to the CMS report?

  • Report this Comment On June 07, 2013, at 1:47 PM, karlpopperfan wrote:

    Wasn't Romneycare supposed to lower costs? Doesn't bode well for Obamacare

  • Report this Comment On June 07, 2013, at 2:02 PM, Hjin wrote:

    All blue states. If this is the Democrats' way of lowering healthcare costs, then we are all ephed.

  • Report this Comment On June 07, 2013, at 2:10 PM, bugmenot wrote:

    It looks like Blue States are always in trouble.

  • Report this Comment On June 07, 2013, at 2:17 PM, TMFFishBiz wrote:
  • Report this Comment On June 07, 2013, at 2:40 PM, squirl033 wrote:

    interesting that aside from Alaska, all these states are liberal bastions in the northeast... and judging by the huge cost increases we're seeing from Owebamacare in other states, the Democrats seem to be intent on making us all pay more for less... this country is screwed!

  • Report this Comment On June 07, 2013, at 4:56 PM, AlaskanChick wrote:

    Alaska is a Republican state smarty pants!

  • Report this Comment On June 07, 2013, at 5:08 PM, ckgod wrote:

    Cars in those states also cost more than the poor red states because they have better cars in general you Repubfools.

  • Report this Comment On June 07, 2013, at 5:16 PM, HighSteppa wrote:

    The GOP/Tea Tards wants everyone to own a AK-47 with a 100 round clip, and a shiny new handgun...and nobody to have health care!

    If you live in a red state...and dont have insurance...you abuse the emergency room and stick it to the tax payers....

  • Report this Comment On June 07, 2013, at 5:26 PM, gergames wrote:

    Whenever government becomes involved in what should be private sector....prices skyrocket! Point in fact.... pre medical inflation before the medicare act...3.1%. Since....7.2%. College tuition inflation prior to the department of education & student loans....2.9% yearly inflation....since....6.8%.

    Government involvement leads to the use of other people's money, giving people the feeling of entitlement, with no cost to themselves.

  • Report this Comment On June 07, 2013, at 5:37 PM, devoish wrote:

    I don't think the Blue States are in trouble - They outlive Mississippi residents by 5 years or more, and their kids survive infancy better too.

    Red staters might want to ask themselves if they are getting their moneys worth from their private hospitals, even if they are paying less.

    But I think it is a tough case for you to make that you are getting the "same" health care the blue states get no matter whether you call it health care or a misallocation of your insurance money by CEO's and investors.

    "A recent survey by Equilar, an executive compensation data firm based in Redwood City, Calif., found that — for the fourth time in five years — health care chief executives commanded the highest pay packages last year among publicly traded companies.

    On average, Equilar found, health care CEOs were paid more than their counterparts in six other industry sectors, including technology, financial services and industrial goods."

    - http://www.stltoday.com/business/local/hospital-ceos-see-dou...

    Best wishes,

    Steven

  • Report this Comment On June 07, 2013, at 5:41 PM, Fansport77 wrote:

    Don't let the story 'Fool' you. Massachusetts is high as a direct result of Romneycare.

  • Report this Comment On June 07, 2013, at 6:44 PM, gergames wrote:

    College inflation alone since the 1979 under Carter making it a cabinet level dept.:

    If tuition was $1,000.00 (just as instanst) in 1979 at 2.9% inflation...vs the rate of 6.8% since:

    year....pre-dept. $....post dept. $

    1979....$1,000.00......$1,000.00

    1980....$1,029.00......$1,068.00

    1981....$1,058.84......$1,140.62

    1982....$1,089.55......$1,218.18

    1983....$1,121.15......$1,301.02

    1984....$1,153.66......$1,389.49

    1985....$1,187.12......$1,483.98

    1986....$1,221.55......$1,584.89

    1987....$1,256.97......$1,692.66

    1988....$1,293.42......$1,807.76

    1989....$1,330.93......$1,930.69

    1990....$1,369.53......$2,061.98

    1991....$1,409.25......$2,202.19

    1992....$1,450.12......$2,361.94

    1993....$1,492.17......$2,521.87

    1994....$1,535.44......$2,693.36

    1995....$1,579.97......$2,876.51

    1996....$1,625.79......$3,072.11

    1997....$1,672.94......$3,281.01

    1998....$1,721.46......$3,504.12

    1999....$1,771.38......$3,742.40

    2000....$1,822.75......$3,996.88

    2001....$1,875.61......$4,268.67

    2002....$1,930.00......$4,559.94

    2003....$1,985.97......$4,869.95

    2004....$2,043.56......$5,201.11

    2005....$2,102.82......$5,554.79

    2006....$2,163.80......$5,932.52

    2007....$2,226.55......$6,335.93

    2008....$2,291.12......$6,766.77

    2009....$2,357.56......$7,226.91

    2010....$2,425.93......$7,718.34

    2011....$2,496.28......$8,243.19

    2012....$2,568.67......$8,803.73

    2013....$2,643.16......$9,402.38

    The same can be said of medical expenses & inflation. Government has not done us any favors.

  • Report this Comment On June 07, 2013, at 6:47 PM, quasimodo007 wrote:

    the evil koch brothers buy these companies so they can give false data to Scare Americans on the President Health care.

    When the evil GOP congress only wanted to give Health care to the Very rich and their mafia style Privilege Crooks of wall street.

  • Report this Comment On June 07, 2013, at 7:00 PM, gergames wrote:

    With an estimated $100 billion in medical fraud, these college for profits tricking young people into loans, $22 billion a year in fraudulent earned income credits, billions in fraudulent child care schemes, rediculous retirements for State, federal, & local government workers....YES...we need more taxes?

  • Report this Comment On June 07, 2013, at 7:03 PM, gergames wrote:

    Perhaps we should give the IRS $1 billion a year to party? Perhaps government workers recieving bonuses should have them quadrupled? Why should teachers retire at 52, draw $40K pensions, & still teach making $60K...lets let them retire at 42 & still teach...WHY NOT!

  • Report this Comment On June 07, 2013, at 7:18 PM, gergames wrote:

    LIBERALS IDEA OF FAIR?

    Todays welfare case...with 3+ kids:

    1. Monthly check...$1,000.00 ($12,000.00 a year disposible income)

    2. food stamps.........$600.00

    3. Sec. 8 housing.....$800.00

    4. Utilities paid.........$300.00 (now includes cell phone)

    5. 100% med/den..$1,000.00?

    TOTAL...................$3,700.00 per month X 12 monthes = $44,400.00

    Single MOM with 3 kids making $15 an hour

    1. Monthly income......$2,600.00 ($39,000 yearly w/$4,800 Co. ins.,1,934.SS+$936 401K )

    2. food cost.................- $600.00

    3. rent cost..................- $800.00

    4. utility cost................- $300.00

    5. insurance/med/car...-$250.00 (+ deductible for 80/20 no dental

    6. gas/carmaintenence...-$100.00

    7. 6.2 % soc. Sec.........-$161.20

    8. 3% matching 401k... -$78.00

    9. She may even have daycare cost?

    TOTAL left......................$310.80 X 12 = $3,729.60 a year disposible income

    LIBERAL FAIRNESS IN AMERICA.....WELFARE FOR ALL!

  • Report this Comment On June 08, 2013, at 12:15 AM, Makikijoe wrote:

    I live in a blue state and I thank God I do.

    Blue state governors and legislatures, generally speaking, have more compassion for their residients. It shows by the fact that they are willing to "go the extra distance" to provide a higher level of health care.

    It shows in many other ways too.

    For example, higher welfare and food stamp benefits. And with Medicaid, easier access to the program with rules that let you qualify easier

    Also, higher unemployment insurance benefits.

    It's interesting that red states have some of the worst social statistics, like high school dropout rates and teen pregnancy rates and divorce rates and infant mortality rates.

    Many low income people have actually migrated to the blue states over the last century, for a better way of life.

    Because we have traditionally had better job opportunities and a much more generous social safety net for those who lose a job or who just can't find one.

    That's particularly true when comparing benefits available in places like Mississippi and Texas as compared to what's available in Illinois or New York.

    So, you red state folks who hate the new health care law and who hate Obama, please do us all a favor.

    Stay in your low-tax, crappy health care states with your crappy benefits and your frequently minimum wage jobs. Red states generally have the highest rates of folks WITHOUT any health insurance at all.

    And yet you continue to elect officials who don't seem to think that it is a priority. Like Rick Perry and Rick Scott. I've grown a bit cynical about you red state folks. I think perhaps you deserve what you get.

  • Report this Comment On June 10, 2013, at 10:00 AM, firstfam wrote:

    What's not shown in the statistics, that people from Delaware , R.I etc will go to Boston for major Health issues. I saw this before in Vegas where people went to LA , if there was a serious problem. The numbers aere misleading. it should be a more regional report.

  • Report this Comment On June 10, 2013, at 3:27 PM, kiernic2 wrote:

    Not to put down the article, but just know these are 2009 numbers. Yes, that is the "most recent data available" but it's still old. Link is available here (look at page 11 of the PDF): http://www.cms.gov/Research-Statistics-Data-and-Systems/Stat...

    CMS says healthcare spending is over $8k per person for 2011 but doesn't have state numbers. So yes, it's higher, but we can't make assumptions about specific states.

    If we're going to judge Obama for these numbers, let's get more updated data. We can't really blame him for 2009 numbers.

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