IBJNews

Study spoils common wisdom on health spending

Back to TopCommentsE-mailPrintBookmark and Share

The Thomson Reuters study that showed Anderson as the highest-spending health care market in the nation also throws a wrench in what was a widely accepted conclusion in health care policy.

That conclusion is that the levels of health care treatment and spending vary widely from one locale to another with no clear reason based on demographics or health outcomes. The idea was first advanced in 1973 by Dr. Jack Wennberg’s analysis of Medicare data from across the country and is now formalized in the Dartmouth Atlas of Health Care.

The Dartmouth research burst into public view during the 2009 health reform debate, when President Obama and his then-budget director Peter Orszag used it to argue that the wide variation in spending was unnecessary and could be eliminated—shaving about 30 percent off the nation’s annual health tab—without diminishing the quality of care one bit.

Also that year, The New Yorker magazine ran an article by Harvard physician Atul Gawande that compared McAllen, Texas—identified by the Dartmouth Atlas as the highest-spending market in the nation—with nearby El Paso. Gawande found no health advantages in McAllen, even though the level of Medicare spending there was far higher than in El Paso. He concluded that cultural factors among the medical community in McAllen were needlessly driving up spending.

But the Thomson Reuters study, which uses data from employer-sponsored health plans instead of Medicare, throws that conclusion into doubt. That’s because McAllen is one of the lowest-spending markets for commercial health insurers.

Residents there spent less than $3,000 per person, compared with spending in the Anderson area of more than $7,200 per person.

“The reason for these differences must be understood to generate effective policies that use resources effectively without compromising health care quality,” wrote the authors of the Thomson Reuters study, which is based on the market research company’s database of claims data from employer health plans and some health insurers.

Interestingly, Anderson is not one of the highest spending areas for Medicare, according to a 2009 analysis of Dartmouth Atlas data by Better Healthcare for Indiana, a not-for-profit group promoting community-based efforts to improve health and health care.

It found that Anderson’s seniors on Medicare spent about $7,200 per year on health care, which was actually lower than spending in Indianapolis and the state as a whole. Those regions tend to be about at the national average.

And even among seniors with commercial health insurance—typically Medicare supplement policies—seniors in Anderson spend less than the national average: about 97 percent of it, according to Thomson Reuters findings.

Meanwhile, health care spending in McAllen, Texas, by seniors with commercial health insurance was about 30 percent higher than the national average.

Some have speculated that doctors and hospitals that derive less revenue from private health insurers may engage in aggressive treatment of seniors in order to boost their revenue from Medicare. But Les Zwirn, executive director of Better Healthcare for Indiana, said it’s unreasonable to assume doctors change their habits that drastically from one patient type to another.

“It’s a mystery,” Zwirn said of the discrepancy between the Dartmouth Atlas and the Thomson Reuters study.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Can your dog sign a marriage license or personally state that he wishes to join you in a legal union? If not then no, you cannot marry him. When you teach him to read, write, and speak a discernible language, then maybe you'll have a reasonable argument. Thanks for playing!

  2. Look no further than Mike Rowe, the former host of dirty jobs, who was also a classically trained singer.

  3. Current law states income taxes are paid to the county of residence not county of income source. The most likely scenario would be some alteration of the income tax distribution formula so money earned in Marion co. would go to Marion Co by residents of other counties would partially be distributed to Marion co. as opposed to now where the entirety is held by the resident's county.

  4. This is more same-old, same-old from a new generation of non-progressive 'progressives and fear mongers. One only needs to look at the economic havoc being experienced in California to understand the effect of drought on economies and people's lives. The same mindset in California turned a blind eye to the growth of population and water needs in California, defeating proposal after proposal to build reservoirs, improve water storage and delivery infrastructure...and the price now being paid for putting the demands of a raucous minority ahead of the needs of many. Some people never, never learn..

  5. I wonder if I can marry him too? Considering we are both males, wouldn't that be a same sex marriage as well? If they don't honor it, I'll scream discrimination just like all these people have....

ADVERTISEMENT