The cost of providing health care 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 published in the New England Journal of Medicine.
The researchers argue that differences in spending 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. A slight difference in growth rates can make a large difference over time. San Francisco and East Long Island 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.
“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, which provides funding to the Dartmouth Atlas Project. “Clinicians who successfully provide high quality care and slow spending growth should be rewarded, not penalized.”
Read the report and related materials.
