Health Care Spending Disparities Stir a Fight
Members of Congress are seriously considering proposals to rein in the growth of health spending by taking tens of billions of dollars of Medicare money away from doctors and hospitals in high-cost areas and using it to help cover the uninsured or treat patients in lower-cost regions.
Those proposals have alarmed lawmakers from higher-cost states like Florida, Massachusetts, New Jersey and New York. But they have won tentative support among some lawmakers from Iowa, Minnesota, Montana, North Dakota, Oregon and Washington, who say their states have long been shortchanged by Medicare.
Nationally, according to the Dartmouth Atlas of Health Care, Medicare spent an average of $8,304 per beneficiary in 2006. Among states, New York was tops, at $9,564, and Hawaii was lowest, at $5,311.
Researchers at Dartmouth Medical School have also found wide variations within states and among cities. Medicare spent $16,351 per beneficiary in Miami in 2006, almost twice the average of $8,331 in San Francisco, they said.
The Senate Finance Committee recently suggested that one way to pay for health care overhaul would be to reduce geographic variations by cutting or capping Medicare payments in “areas where per-beneficiary spending is above a certain threshold, compared with the national average.”
Wow! This concept would split the Democratic party. For example,
“There is too much uncertainty about the Dartmouth study to use it as a basis for public policy,” said Senator John Kerry, Democrat of Massachusetts. “Researchers can’t explain why some areas of the country spend more on health care than others. There are many reasons spending could vary: higher costs of living, sicker people or more teaching hospitals.”
“States like Massachusetts are concentrated centers of medical innovation where cutting-edge treatments are tested and some of the nation’s finest doctors are trained,” Mr. Kerry added. “This work might cost a little more, but it benefits the entire country.”
Madeline H. Otto, an aide to Senator Bill Nelson, Democrat of Florida, said he was “adamantly opposed” to the proposed cuts in higher-spending areas because the cuts did not distinguish between necessary and unnecessary care.
Mr. Orszag says health spending could be reduced by as much as 30 percent, or $700 billion a year, without compromising the quality of care, if more doctors and hospitals practiced like those in low-cost areas. The supply of hospitals, medical specialists and high-tech equipment “appears to generate its own demand,” Mr. Orszag has said.
A Democrat from a low-spending state said critics were trying to “blow holes in the Dartmouth analysis.”
Dr. Michael L. Langberg, senior vice president of Cedars-Sinai Medical Center in Los Angeles, is among the critics.
“The statement that Medicare costs can be cut by 30 percent has been repeated so many times that it has come to be viewed as a proven fact by some,” Dr. Langberg said in a recent letter to the Senate Finance Committee. “It is not a fact. It is a gross oversimplification of an untested theory.”
Dr. Langberg endorsed the goal of covering the uninsured, but said, “We do not believe that rushing to make large cuts in Medicare payments to hospitals is the right way to fund that coverage.” The Dartmouth team has cited Cedars-Sinai as having very high Medicare spending per beneficiary.
The current geographic factor in Medicare payments hardly seems fair. I would love to see this issue addressed, albeit I am uncertain of the best way to proceed.
Geographic variation is a clue. Please read this article – and the Gawande New Yorker article which I cited last week.
{ 4 comments… read them below or add one }
No one wants to admit what really drives the geographic cost variabilty: Cultural attitudes and race (race being a proxy for socio-economic status, acculturation, and education). Inhabitants of Rochester MN are much more homogenous in their attitudes toward health, prevention, civic-mindedness, and willingness to accept “low tech” medical reassurance than those inhabitants in New York City, Miami, Mississippi, and San Francisco.
So, Oskie…that’s quite a contention. What do you make of this?
http://www.dartmouthatlas.org/topics/preference_sensitive.pdf
The Gawande article was excellent. By homing in on the culture of medicine practiced in McAllen TX I believe he hit the nail on the head. And one does not shift cultures with the stroke of a pen.
I work in a state where home health care expenditures grew by 144% between 2002 and 2006. HH is viewed as a profit center. I have noticed that once patients are on home health, they never come off of HH. I used to view it as a bridge for a few weeks after hospitalization. Not so. However, it has become the culture of physicians to prescribe it, and of patients to expect it. When I tell them that they don’t qualify for HH (and then the prized “provider”), I am a bad doc since everyone else has one. Usually, the patients end up getting it from someone else. I had one patient who remains quite active despite his metastatic cancer. He told me that he was no longer out working the other day….his wife was having medical problems. HH came out to “investigate” her and during the process had to investigate him as well. They told him that if he would stop working, they could provide him with services…..This gentleman was out making hay before HH showed up. He has no skilled nursing needs (measure vitals when that is done every time he comes to the clinic??). He does not qualify for HH, or at least not they way I understand it. In the mean time, we can’t find the funds to treat some people for their cancers. The pot is limited. When will people learn?
I do believe that the outliers for funding are a sign of potential waste. JMO.