Psychiatric patients pay less in raw dollars when they're admitted to a hospital than someone getting a knee replaced. But as a share of what the stay actually costs, they pay more. That gap has persisted for nearly a decade, and it runs directly counter to what most people assume about how Medicare treats behavioral health.

The Percentage Gap That Dollar Figures Hide

Start with the headline numbers. In 2023, Medicare beneficiaries admitted for major surgical procedures paid an average of $6,326 out of pocket per discharge, against a total payment of $37,217. That's 17% of the bill. Psychiatric and substance use patients, using 2021 figures (the most recent available), paid $2,206 per discharge against a total of $11,449. That's 19.3% of the bill.

Two percentage points sounds modest. But it means that every time a Medicare beneficiary is admitted for a psychiatric or substance use condition, they absorb a larger fraction of the cost than a patient who just had cardiac surgery or a joint replacement. The absolute dollar difference is real and matters for household budgets. The percentage difference matters for understanding how Medicare's cost-sharing structure is actually designed.

Psychiatric stays are cheaper overall because the underlying care is less resource-intensive than major surgery. But cheaper care doesn't translate into a smaller proportional burden on the patient. For beneficiaries on fixed incomes, paying nearly one-fifth of any hospital bill out of pocket is a meaningful financial exposure.

A Decade of Diverging Trajectories

The trend lines make the disparity more striking. In 2013, surgical patients paid 12.3% of total costs out of pocket. By 2023, that share had grown to 17%, an increase of 4.7 percentage points over ten years. Surgical out-of-pocket costs per discharge rose from $3,361 in 2013 to $6,326 in 2023, nearly doubling in absolute terms.

Psychiatric and substance use patients started from a higher baseline. Their beneficiary share was 20.1% in 2013, and it remained at 19.3% in 2021. The share barely moved. Surgical patients were catching up from below while psychiatric patients held steady near the top.

Total discharges fell sharply in both categories over the period. Major surgical discharges dropped from 802,795 in 2013 to 264,265 in 2023. Psychiatric and substance use discharges fell from 150,895 in 2013 to 91,231 in 2021. Fewer patients are being admitted in both categories, but the cost-sharing burden on those who are admitted has not eased.

Where the Ratio Gets Extreme

Across all DRGs, the beneficiary-to-Medicare payment ratio reaches levels that are hard to reconcile with the program's original design. DRG 310, covering cardiac arrhythmia and conduction disorders without complications, had a beneficiary-to-Medicare ratio of 50% across 568,419 total discharges. Patients paid $1,544 per discharge while Medicare paid $3,089. For a condition that is often unplanned and affects elderly patients with limited financial flexibility, that ratio is striking.

Kidney transplants (DRG 652) carried the highest total beneficiary burden in absolute terms: $1,361,962,978 across all years, with an average of $12,099 per discharge and a beneficiary-to-Medicare ratio of 46.31%. The scale of that aggregate figure reflects both the high per-discharge cost and the volume of transplants performed over the study period.

These outliers illustrate a broader structural feature of Medicare inpatient cost-sharing. The program's deductible and coinsurance design doesn't scale proportionally with total payment in a way that protects patients from high percentage burdens on lower-cost stays. Psychiatric admissions sit in a range where the fixed cost-sharing amounts consume a larger slice of a smaller pie.

What remains unresolved is whether the persistent gap between psychiatric and surgical cost-sharing percentages reflects differences in how often behavioral health patients carry supplemental coverage, how hospitals price these stays, or something embedded in Medicare's reimbursement structure for behavioral health. The data shows the gap clearly. It doesn't close it.