Medicare Spending Has Wide Regional Disparities, Study Finds

"A new study examining 14 years of Medicare spending finds that state-by-state increases vary wildly depending on how much medical care is available."

"The study, released on Feb. 25 in the New England Journal of Medicine, found that annual Medicare spending increased an average of 3.5% from 1992 to 2006 nationwide, but the burden on the government program was not uniform: Nebraska's spending rose 5.3% annually over the same period, more than any other state, while the District of Columbia clocked in with the lowest annual inflation, at 1.6%."

Spending per Medicare enrollee also varied widely, from a high of $9,564 in New York in 2006 to a low of $5,311 in Hawaii. The national average for 2006 was $8,304. The reasons given for the discrepancies were not the health or wealth of a particular state's population but the amount of health-care resources available. The more hospital beds and doctors in a region, the higher the costs billed to Medicare. "

"President Barack Obama, in his speech to Congress on Feb. 24, called for major reforms to the U.S. health-care system that would cover the 45 million uninsured and lower costs. Most health-care experts think the cost issue will be far more difficult to address, and far more crucial, than coverage. Earlier this week federal economists estimated that total U.S. health-care spending will reach $2.5 trillion this year, consuming 17.% of gross domestic product. By 2018 national health-care spending is expected to nearly double, to $4.4 trillion, or 20.3% of GDP. The Dartmouth researchers estimated that, at current spending rates, the Medicare balance sheet will be $660 billion in the red by 2023. However, if the annual growth in spending were reduced from the national average of 3.5% to San Francisco's 2.4%, Medicare could instead accrue a balance of $758 billion over the same period."

"Fisher blames the current fee-for-service payment structure, where doctors and hospitals are paid for every service regardless of need or outcome, for these practices. "Physicians cannot afford the time it takes to help patients understand why a test or procedure is not needed. Hospitals lose money when they improve care in ways that reduce admissions," the study noted. To lower costs, Fisher suggests that policymakers focus reform efforts on current areas of overspending, and encourage doctors in New York to pay attention to Hawaii, for example. "