Geographic disparities in Medicare payment rates have long been talked about – and complained about – among the nation’s rural health care organizations and practitioners, especially in the rural Midwest. But it took an eye-opening article in The New Yorker, and the looming prospect of health care reform, to finally get policymakers to sit up and really take notice.
In his now-famous article, Dr. Atul Gawande uses McAllen, Texas, as an illustration of the wide regional differences in how much Medicare spends per person:
It is one of the most expensive health-care markets in the country. Only Miami – which has much higher labor and living costs – spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average.
There have always been geographic variations in health care spending, physician practice patterns and health care consumption patterns. The rural Midwest, for instance, tends to be more conservative, both in its use of high-dollar health care services and its overall spending on health care.
Even so, most people are taken aback when they see these patterns visually represented on a map:
The map was developed by the Dartmouth Atlas of Health Care, which has been tracking this data for more than two decades. The darkest areas on the map show where Medicare reimbursements per enrollee are highest. You’ll notice the lightest areas, where Medicare spending is lowest, include almost the entire state of Minnesota.
If you were to go back in time to 1965, when the federal Medicare program was established, the map likely would look very similar. In fact, Medicare payment rates were originally established using a formula based on prevailing costs in a given geographic area. Over the years, these regional variations have become more or less cemented into place, and in many cases the gap has widened even further.
The Dartmouth Atlas Project notes, for instance, that between 1992 and 2006, inflation-adjusted spending on Medicare rose 3.5 percent each year. In Miami, however, it grew faster, at the rate of 5 percent a year. In San Francisco it grew a slower 2.4 percent annually. If Medicare spending in all other regions in the U.S. grew at the same rate as that in San Francisco, a cumulative savings of $1.42 trillion could be achieved by 2023, the Dartmouth analysts estimate.
What’s especially intriguing is that the quality of care doesn’t appear to be any better in high-cost regions of the U.S. than it is in the regions that spend less on health care. In fact, the lower-cost regions usually score better on quality measures.
There can be many reasons why health care spending is higher in certain communities. Perhaps the population is older or sicker or has a higher incidence of chronic disease. Maybe there’s a higher concentration of medical services or medical specialties. In areas that spend less, poverty may be more prevalent.
The Dartmouth researchers believe there’s an overriding reason, however, for the geographic variation in health care spending. They sum it up in two words: local context. It’s in how local physicians run their practices and the types of interventions they provide for their patients. It’s in how local hospitals and health care organizations make strategic decisions, such as acquiring new technology or adding new services. It’s hard to imagine that patient expectations – surgery, for instance, vs. trying more conservative treatment first – don’t contribute as well.
Put another way, it’s about local culture – the values, attitudes and behaviors that often are so ingrained, we rarely notice or question them.
So here’s the really big question: If some states, such as Minnesota, can spend below the national average yet still provide good care, why can’t all states do this? If all states did this, could costs be lowered without sacrificing quality?
One of the fears being voiced at town halls and in online forums is that if we reduce health care spending, someone will have to go without. But if the Dartmouth Atlas data is any indication, many states are already doing this and managing to preserve some quality besides.
Changing local culture can be incredibly hard, especially when so many Americans have been conditioned to think that more health care is invariably better. And when all is said and done, the culture of local health care communities is still a single small slice of an enormous, complicated system. Achieving genuine change will take far more than realigning local or regional habits and expectations of how health care should be provided.
The point, though, is that we often overlook the local. We tend to search instead for outside explanations and solutions, when all along we could be looking a lot closer to home.