Writing at Economix, my colleague Jonathan Skinner answers the criticisms of using the Dartmouth Atlas studies of health care spending variation as a basis for policy reform (see this post from last week). From his fourth point, on what to do about regional variation:
The critics are also right to be worried that simply cutting reimbursement rates won’t turn an expensive and fragmented health-care system (like Miami’s, with 2006 Medicare costs of $16,351 per person), into an efficient, integrated system of care (like that of Grand Junction, Colo., with costs of $5,873). How then can regional systems of care be transformed? One proposal is to establish accountable care organizations, or A.C.O.’s. These are physician-hospital networks designed to encourage providers to coordinate care, improve quality, and share some of the resulting savings. Elliott Fisher of Dartmouth and Mark McClellan of the Brookings Institution have argued that this is the key building block for any health-care reform.
You can also see Jon discussing these ideas as part of this Rockefeller Center panel (his talk starts about an hour into the program).
When one includes non-Medicare data
When one looks at total medical expenditures by state and at the average per patient cost of medical services in the two states, Colorado and Florida, one reaches an entirely different conclusion than the Dartmouth study.
For example in 2006, according to the Meps (Medical Expenditure Panel Survey), the average medical expenditure (including Medicare, private health insurance, out of pocket, uninsured, etc.) by all patients in 2006 in Colorado was $3,585. It was $3,586 for Florida. The link to the Meps data is:
http://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/hc/state_expend/2006/table1.htm
The link to the main Meps data page on state medical expenditures is:
http://www.meps.ahrq.gov/mepsweb/data_stats/quick_tables_results.jsp?component=1&searchText=&tableSeries=8&year=-1
The Dartmouth study seems to be in part an artifact of Medicare reimbursement policies. There are other federal funding programs to medical providers, e.g., Rural Health Grants and others, etc., and these vary in per capita amount for each state according to federal law and formulas. Dartmouth only looks at Medicare expenditures and does not include other federal medical reimbursement and funding programs. It does not look at total state medical expenditures.
Complex and strict rules limit what can be included in Medicare reimbursement, but as a general rule, double billing is prohibited. The differences that Dartmouth sees could be that some states get less non-Medicare funding and bill a higher share of costs through to Medicare. Other states bill the federal government for part of the same costs under different federal programs. While Medicare expenditures look higher per procedure in some states than other states, the total costs of the two procedures could be identical. It could all be due to reimbursement laws and rules.
Dartmouth is a leader in
Dartmouth is a leader in explaining many of the reasons why there are regional differences is medical care expenses and outcomes. But their efforts do not touch the underlying issue. American’s today receive medical care. Americans in the past received physician care.