Research finds higher Medicare spending in unhealthy states
By - Socioeconomic factors that affect the need for medical care, along with interactions between the Medicare system and other parts of the health system are main reasons why there is variation in Medicare health spending between states, according to a recent study.
Louise Sheiner, a senior fellow at the Brookings Institution and author of Why the Geographic Variation in Health Care Spending Can’t Tell us Much about the Efficiency or Quality of our Health Care System, explained that she wanted to explore the geographic variation in Medicare and non-Medicare health spending. Moreover, Sheiner studied the econometric differences between controlling for health attributes at the state level as opposed to controlling for them at the individual level. The latter approach is used by the Dartmouth group.
The study goes against the traditional thought process, claims Sheiner. Typically, it is believed that wasteful healthcare is because of treatment practices that vary from region to region. However, the research shows that higher Medicare spending in certain states is due to varying conditions in each location, rather than different practice styles.
“A comparison of health spending in Mississippi with health spending in Minnesota is not likely to provide a useful metric of the ‘inefficiencies’ of the health system, nor is it likely to provide a useful guide to improve the quality of care in places where it is lacking,” Sheiner wrote.
For example, Louisiana has a high rate of diabetes— approximately 11 percent of the population — which contributes to its top status as the leading Medicare spender at nearly $8,300 per patient in that system. Additionally, Utah is the third-lowest in diabetes rates at just over 6 percent and spends the least at just over $5,400 per Medicare patient.
With the US employing a state-level approach, as opposed to Dartmouth’s individual-level approach, Sheiner explains in her research that “states with similar demographic characteristics have similar levels of real beneficiary Medicare spending. Thus, what the Dartmouth researchers have deemed as differences in ‘practice styles’ are not randomly distributed, but are instead closely linked to population characteristics.”
Sheiner also found that the cross-state variation in Medicare spending is greatly associated with the characteristics of state populations. Once these characteristic are controlled for, the variation in spending is fairly small, Sheiner explained.
“In fact, states that appear to be high-cost, like Florida and Connecticut, are no longer big health care spenders once demographic and health variables are controlled for, just as states that appear to be low health care spender like Utah and Vermont are actually relatively high spenders once those adjustments are made,” stated the report summary.
There is also a negative correlation between each state’s level and growth of Medicare spending. Essentially, low-spending states tend to have higher growth rates than high-spending states. This means that examining low-cost states’ practice patterns isn’t likely to provide the answer to “bending the cost curve” in health spending, Sheiner said.
