Wide Variations In Spending Key To Health Reform Says Dartmouth Atlas
The cost of providing healthcare to seniors is
rising more than twice as fast in Dallas as in San Diego, and Medicare
now spends nearly three times more to care for its enrollees in Miami
than it does in Honolulu.
This illustrates how huge inefficiencies in the
U.S. healthcare system are hamstringing the nation’s ability
to expand access to care, according to a new analysis of Medicare
spending by researchers of the Dartmouth Atlas Project.
The analysis was published in the New England
Journal of Medicine.
Many experts have blamed the growth in spending on
advances in medical technology. But the differences in growth rates
across regions show that advancing technology is only part of the
explanation. Patients in San Diego have access to the same technology
as those in Houston, and those in low-cost regions are not deprived of
needed care. On the contrary, the researchers note that care is often
better in low-cost areas.
The authors argue that the differences in growth
are largely due to discretionary decisions by physicians that are
influenced by the local availability of hospital beds, imaging centers
and other resources — and a payment system that rewards
growth and higher utilization.
"To paraphrase a line from the gun control debate:
technology doesn’t drive the growth in healthcare spending;
people do," said lead-author Dr. Elliott Fisher, principal investigator
for the Dartmouth Atlas Project and director of the Center for Health
Policy Research at the Dartmouth Institute for Health Policy and
Clinical Practice. "The good news is that in many regions, spending is
growing relatively slowly. Reformers can learn from these regions and
put in place policies that help them sustain what they are doing now,
and encourage high-cost, high-growth regions to change their ways."
The researchers calculated the growth rate of
Medicare spending per enrollee from 1992-2006. In thearticle, they
analyzed spending differences in 306 local healthcare markets. The
results are also available for states.
Nationally, Medicare spent an average of $8,304
per enrollee in 2006, and national spending grew at a rate of 3.5
percent annually from 1992 to 2006.
Among states, New York was tops in spending per
enrollee, at $9,564. Hawaii was lowest, at $5,311. The growth rates and
spending per enrollee do not always track, as some high-growth states
started from a low base, and vice versa. Nebraska had the highest
growth rate, at 5.3 percent, although it was 39th on spending per
enrollee, at $6,922. In contrast, the District of Columbia had the
lowest growth rate, at 1.6 percent, although it was 29th in spending,
at $7,551 per enrollee.
Where Medicare spending per enrollee grew at an
annual rate of 5 percent in Miami, the rate was less than half, at 2.4
percent, in San Francisco. Medicare spent $16,351 per enrollee in Miami
in 2006, almost twice the spending of $8,331 in San Francisco.
The contrasting history of spending in San
Francisco and East Long Island shows how even a slight difference in
growth rates can make a large difference over time. Both regions had
nearly identical spending per enrollee in 1992. But where San Francisco
grew at 2.4 percent for the next 14 years, spending in East Long Island
exploded at 4 percent. So, by 2006 spending in East Long Island was
$2,300 more per enrollee than in San Francisco — about $1
billion in additional annual Medicare spending in a single region.
The researchers project that, at current spending
rates, Medicare will be $660 billion in the red by 2023. But by
reducing the annual growth in per capita spending from 3.5 percent, the
national average, to 2.4 percent, the rate in San Francisco, Medicare
could save $1.42 trillion and turn the deficit into a healthy surplus.
"The good news is that small differences, because
of compounding, can make an enormous difference for the long-term
solvency of Medicare and our ability to expand coverage for the
uninsured," said co-author Jonathan Skinner, the John Sloan Dickey
Third Century Chair of Economics at Dartmouth College.
The authors called on physicians to lead an effort
to reform how the U.S. delivers and pays for healthcare to bring
spending under control. They write: "Payment systems could then shift
from purely volume-based payments to systems ... that foster
accountability for the overall costs and quality of care, allowing
physicians to align their work more closely with the values that
brought them to healthcare. "
"This work demonstrates why health reformers
should work to realign private and public payment schemes to benefit
quality performance over the volume of services," said Dr. Risa
Lavizzo-Mourey, president and CEO of the Robert Wood Johnson
Foundation. "Clinicians who successfully provide high quality care and
slow spending growth should be rewarded, not penalized."
"This is an opportunity for physicians to lead,"
said Dr. Julie Bynum, co-author and assistant professor of Medicine at
Dartmouth Medical School. "But even though doctors still make most of
the critical decisions about how and where their patients get care,
they will need help from payers and policymakers. Physicians operate
under the rules of a system that is rigged to reward high-cost care."
The Dartmouth Atlas Project is run by the
Dartmouth Institute for Health Policy and Clinical Practice.The
principal funding for the project comes from the Robert Wood Johnson
Foundation. Funding for this research was also provided by the National
Institute of Aging.
Address: Dartmouth Atlas Project, c/o The
Dartmouth Institute for Health Policy and Clinical Practice, 35
Centerra Parkway, Suite 202, Lebanon, NH 03766; (603) 653-0800, www.dartmouthatlas.org.