Variation in Spending Due to Variation in Health Status
The idea that uneven Medicare health care spending around the country is due to wasteful practices and overtreatment — a concept that influenced the federal health law ― takes another hit in a study published Tuesday. The paper concludes that health differences around the country explain between 75 percent and 85 percent of the cost variations…
Their conclusions are based on the wide differences in spending, which in 2011 ranged from an average of $14,085 per Medicare beneficiary in Miami, to $5,563 per beneficiary in Honolulu, even after Medicare’s cost of living and other regional adjustments — but not health status — were taken into account….
The new paper is one of the sharpest attacks yet on the work of the Dartmouth Institute for Health Policy & Clinical Practice, whose three decades of research has popularized the theory that the unexplained regional differences in spending are due to the aggressiveness of some physicians to do more, in large part because it enriches them. The theory, popularized by a 2009 New Yorker article on high spending in McAllen, Texas, has divided health policy experts. (KHN)
“The paper concludes that health differences around the country explain between 75 percent and 85 percent of the cost variations.”
Doesn’t this seem obvious?
^How easily we can be convinced by something that isn’t logical. It makes you wonder what other foundational studies are incorrect.
Variation of cost of living is still a factor, but not the main factor.
This is an interesting argument. However, I’m hesitant to accept the assertion that whole regions of the country are much less healthy than others. As sample size increases, the variation from the mean decreases. That is: a few individuals are undoubtedly less healthy. But are we to believe that the entire Medicare population of Miami and McAllen, Texas, are just not healthy?
Maybe people put off medical care until old and infirm (that would support the conclusion). Maybe the uninsured and Medicaid is so pervasive that doctors over-treat Medicare to compensate for low fees elsewhere.
I agree the disparity could be partly due to health status. But there are other factors at work.
Wasteful spending and overtreatment is present. There is no escaping that problem. However, not sure that is directly correlated to Medicare spending. Seems like there should be more studies=more spending…oh wait, perhaps there should be less red tape and let individuals take more control over their health.
Consistency would really help consumers. It’s amazing how healthcare policy fluctuates as much as it does.
@Taylor
I concur. Individuals should be making their own decisions.
It seems like health status is an important thing to control for.
“If one hospital spends a lot on five patients and manages to keep four of them alive, while another spends less on each but all five die, the hospital that saved patients could rank lower because Dartmouth compares only costs before death.”
Dartmouth Institute for Health Policy and Clinical Practice Responds to Reschovsky et al
http://tdi.dartmouth.edu/press/updates/dartmouth-institute-for-health-policy-and-clincial-practice-responds-to-res
A quote from the Dartmouth Institute:
“The first and most important is that they include current HCCs – diagnostic billing codes – as “explanatory” factors for spending. Physicians and hospitals cannot bill Medicare without a diagnosis. So for example if an individual in McAllen TX is given a stent by an aggressive cardiologist she is coded as having serious heart disease. By contrast, that same patient in Grand Junction Colorado is sent home with at best a much less serious condition (if at all). In this case, the authors’ use of the HCC billing codes would “explain” the more aggressive cardiologist’s behavior as worse health status, rather than attributing it to the more aggressive physician behavior.”
The Dartmouth argument — that doctors in some places are greedier than doctors in other places — has always been absurd. They have never bothered to test the assertion. If true, why? Did the doctors in Location A get different training than those in Location B? What plausible explanation could there be? Dartmouth usually attributes it to the payment system, but the payment system is IDENTICAL in both locations!
Small wonder health policy in the United States always fails, with imbeciles like these providing the rationale.
I have a theory that people will willingly allow their health to decrease, simply for the fact that they believe that, in the future, there will be medical technology advances that allow them to offset the bad choices they have made in the interim (say, in terms of obesity or diabetes).
Call it the Wall-E effect.
This result may simply be another extension of this theory. In large, urbanized areas, we would expect the rate of technology diffusion to probably be higher (or the rate of technological improvements to be quicker) than in other areas.
So, we see people with lower health statuses having to spend more on reactive (curative) care because they have allowed their problems to accumulate, whereas the costs with preventive care (diet, exercise) are, in large part, time costs, which don’t factor into this.
Richard,
Pretty complicated theory. Let’s try a simpler one.
If there is no reason doctors in one place are greedier than doctors in another place, and if the payment system is the same in all places, what could account for the difference?
You are right that it must be the patient. But what is the difference between patients in Miami and Grand Junction? I would suggest that in Miami many Medicare patients are migrants from elsewhere. That means they have left their friends and families behind. They don’t have the support systems they used to enjoy. They are isolated.
But patients in Grand Junction still belong to the same church, they still belong to the same civic groups, they still have their children and grandchildren close by, they still live in the same neighborhood.
Neither Dartmouth nor the researchers in this study have given the slightest thought to these human factors. To ALL these researchers, patients are nothing more than a collection of symptoms and diagnostic codes, maybe with a few simple demographics (age, sex, race) thrown in.
The entire process is monstrously dehumanizing.
Greg,
I don’t disagree that human factors (behavioral as well as the structure of their lives) play a huge role in some of the consequences that we see.
I also don’t disagree with your simpler theory, though we have seen large groups take actions that lead to less optimal outcomes than what individuals do (a somewhat herd effect).
I would argue, however, that there may be an exascerbating factor, in your example, that may make the “group support system” hypothesis a bit weaker. The ethnic and cultural groups that migrants can potentially draw upon when looking at where to move. A common culture can alleviate the problems of leaving your immediate support system, and provide a secondary one.
All in all, I think it definitely is a combination of your group/individual factors, and my behavioral factors that drive (at the least) a significant minority of the consequences that we see.
Curious follow-up.
I went to the article Anmar linked to and posted a comment similar to my comments above, suggesting that Dartmouth is myopic in ignoring patient factors. Went back just now and the comments function is no longer available. These guys really do not like to be challenged, do they?
It’s sad. I learn by debating and by being wrong. Either I have to defend my positions, or I have to re-solidify them.
And I’m wrong quite often!
Some researchers simply can’t grasp the position that being wrong occasionally is a great thing.