Guest post: Regional Disparities in Health Spending in Medicare
by Michael Halasy Health Policy Analyst and Emergency Medicine PA
Regional Disparities in Health Spending…
Jason Shafrin, over at the Healthcare Economist, brings up an interesting paper examining the data from the Dartmouth Atlas. For those that are unfamiliar, the Dartmouth Atlas is a compendium of data examining Medicare spending per beneficiary, and then comparing that spending by geographic region. The differences are stark. I know. I use the Dartmouth Atlas data in my health policy talks all the time. The data was highlighted in an Atul Gawande article in 2009 on McAllen, Texas. Jason points us to an article from the New England Journal by Zuckerman…
“Unadjusted Medicare spending per beneficiary was 52% higher in geographic regions in the highest spending quintile than in regions in the lowest quintile. After adjustment for demographic and baseline health characteristics and changes in health status, the difference in spending between the highest and lowest quintiles was reduced to 33%. Health status accounted for 29% of the unadjusted geographic difference in per-beneficiary spending; additional adjustment for area-level dif ferences in the supply of medical resources did not further reduce the observed differences between the top and bottom quintiles.”
Now, sure, health status may reduce the difference in spending, but it doesn’t completely eliminate it. In fact, I would argue that 33% is still a large difference, and one that still needs to be addressed. Comparing the spending in Florida to Minnesota PER beneficiary is quite startling indeed.
crossposted with Health Policy Wonk
I couldn’t find a link to the regional differences in spending. Perhaps this might provide some insights.
I found it: http://www.rwjf.org/qualityequality/interactive.jsp?id=38
I find it difficult to know exactly how to view this. First of all I don’t know what the maps would look like if they covered non-medicare spending. Second, I don’t know what % of business is done by the medical community (poor, insured, medicare, other) in each area. Third, I don’t know what the locality differences in prices/salaries are. And other things some of which are acknowledged by the investigators such as suplemental/workplace insurance. Perhaps access is the answer for one region while cost of business is a reason for another.
I also wonder if there is any correlation with the Medicare Fraud business/professionals.
I’m with you Anna Lee. I can’t make heads or tails of the map. Yet, there are such dramatic differences in Medicare spending per enrollee depending on region.
Well, it should be convoluted with usage. But I would imagine that health professionals that want riches, if any, would migrate to larger populations. So, one would find more people who want wealth but are not necessarily honest in these areas too. Just guessing. I guess you’d have to look at this on a per patient basis or something. Florida is interesting in the regional map, for example.
just to clarify, the Dartmouth Atlas Map is spending PER Medicare Beneficiary, so per patient.
This should control for population differences. Some of the stuff that you might want to examine regarding spending per NON Medicare patient is likely available in the MEPS data (Medical Expenditure Panel Survey).
The Dartmouth data really shows us that areas with higher spending also correlate with areas of higher national spending (Texas for one example), and that some level of unnecessary testing and/or treatment is occuring simply for profits sake.
I would HIGHLY recommend reading the Atul Gawande article on McAllen…
One thing that many Congressmen claimed when this report was released….was “Well, our patients are sicker than yours, and that’s why we spend more”….
But it seems that even after controlling for that, there is still a 33% variation….
There are several large data sets that we use in health policy….the Atlas is one, MEPS, the CMS Expenditure dataset….
Here, check out the Gawande piece.
Michael, what do you think about this idea? Most of us older HC recipients have multiple Drs. Each requires some lab work up.
What if we consolidated those labs by coordinating the Drs visits into the same cycle/month? My own situation would see a 2/3s cut in labs per year. For those of us who have controlled our chronic conditions, why not have them monitored by just one Dr. instead of the typical 2-3 specialists resulting in a further HC savings. Finally, after a significant history of having the chronic conditions under control limiting the Dr visits/labs to once a year versus the twice common today? That results in another 50% cut in the reduced costs by implementing the prior suggestions.
That’s a rationing system that is morally and logically acceptable without draconian changes and laws.
For those who have not followed the logic and math, that approach could amount to an 83% savings in the annual Dr and lab costs for the reasonably healthy HC recipient with chronic conditions.
MH, I think the article describes something I have observed as an over-insured person. It is not just Medicare patients but also anyone who has abundant health insurance. I almost feared going to a doctor because in the past because so many doctors seemed to try to put me through every test in their office, then every test in the system, and finally hospitalization for further observation. So a bout of indigestion results in a path to a final diagnosis that I didn’t have a massive heart attack or someother overly dramatic “concern”. I started refusing treatment and signing wavers. Luckily, my heart and other wild self-diagnoses were correct since I had no way of knowing when we (my insurance companies and I) were just spending money or when we getting needed health services. I finally found a doctor who wasn’t much of a warm and fuzzy doctor but he was experienced and didn’t bother with extras.
I don’t understand how shifting cost to the patient for “shopping” accomplishes much in terms of health outcomes. As I said, in order to refuse treatment, I had to take a wild guess that my diagnosis of myself was correct and not the doctor’s rather fearful “concern” of my impending demise.
So this is a problem for all of health care that is bought by the unit price. On the other hand my experience with HMO-type organizations in the 80s in a desert area of California was that they would hire any specialist that would agree to come even if they were barely adequate for the position. I don’t know if that has changed but it drove me to FFS (PPO) the remainder of my life. About the turn of the century I found myself fighting back against the obvious exploitation of FFS for the selfish reason that I didn’t have time to be the pawn in supporting overuse of hospitals, imagining centers and laboratories. Unfortunately, retirees probably do have the time and need the socialization.
So much for the background to this question – If the medical community is forced to reduce the profit in Medicare and the supply of medical experts remains inadequate, won’t the medical community refuse Medicare patients in favor of the more profitable insured FFS patients?
Frankly, the percent of doctors who put out a shingle as Primary Care & Geriatrics is very low despite the growing aged population. Is that because “Geriatrics” is not a real area or because attracting too many Medicare/older patients isn’t as profitable?
A final word – The most egregious overuse problem occurs when the patient silently co-conspires with the physician to overuse the system. I want to think this is rare though.
Not sure about your quota system but telemedicine might play an efficient role. The problem is the profit lost using new ideas, technology, quotas or coordination. If you read the article at MH’s link above there is a big and growing problem with profit motives. And then too Heath Services is a sector of the market needing shareholder profits. The same is true of insurance. But, considering that the US is reliant on these for it’s own economy, will we be tempted to make efficiencies without savings?
MH, I realized that this was per patient. For example, if you had a community with many FFS insurance holders you might be able to afford lower Medicare prices but if you had a community comprised mainly of uninsured, Medicaid, Medicare, and other government programs you might be tempted to stretch for dollars to cover your costs and, in your mind, justify it using your choice of serving a less desirable population. Of course, I could logic the opposite. But, I was just looking for a baseline of that gave me the local perspective of charges. It seemed to me that the prices for the non-Medicare/Medicaid or for the insured might give me more perspective. I think the New Yorker article does underscore that their is a local cultural element to the pricing and usage.
Anna, I agree with your description in the first paragraph. I think it is also a clasic example of over testing or that ole defensive medicine. this statment, jhowever, is just funny: “ Unfortunately, retirees probably do have the time and need the socialization. ” Or crave the socializing? 😉
There really isn’t much of a basis for what you are claiming on defensive med. What there is a basis for is the selling of med services, procedures, and pharma in order to be profitable and regadless of the benefit gained for the patient.
I wasn’t really being amusing. Needing the socialization is not necessarily a non-medical issue. With the elderly socialization can be a piece of preventative care but I heard people, maybe here, tell stories of doctors believing that elderly patients overuse the system often from a need of attention or human contact. I don’t know if that is true or not. So I guess the question is why the doctors would allow this and I guess the answer is they see it as part of the overall health outcomes.
Myself, I see it as heart-breaking, if true.
I’m kind of mystified if you are agreeing with my first paragraph but not my second. I am not a medical person so self-diagnosis is not something I’d recommend others imitate.
Run, I don’t see it. Unless the Dr prescribing the meds or requesting the tests is getting a kick back, it has no affect on the Dr’s bottom line.
Anna – “I’m kind of mystified if you are agreeing with my first paragraph but not my second. I am not a medical person so self-diagnosis is not something I’d recommend others imitate.” We all make the decision whether and when to seek medical help. For me, your example showed some common sense when making that decision, and reduced a likelihood to over use. I hope you use the same sense when deciding to use over the counter drugs.
Choices are sometimes complicated. My husband is taking a medication that is under patent. There is no generic and nothing similar. The alternatives might have some short term good but the risk is that the metabolite will lead to an early disability so I chose to pay the extra cost of a Tier I. Without insurance though, it would be as expensive as half of my health care premiums. The government gave the Israeli company that holds the patent a 21 year extension on that patent a few years ago so no hope for relief.
Myself, I hate pills, forget to take them, and am cheap when it comes to myself so I see me with those $4 WalMart generics in my creep to wormsville.