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Clarifying sources of geographic differences in Medicare spending
Stephen Zuckerman1, Timothy Waidmann, Robert Berenson
1Urban Institute, Washington, DC 20037, USA. szuckerman@urban.org
The New England Journal of Medicine
|May 14, 2010
Summary
Geographic variations in Medicare spending are influenced by beneficiary health and local healthcare resources, not just program inefficiency. Understanding these factors is key to controlling costs.
Area of Science:
- Health Economics
- Healthcare Policy
- Medicare Research
Background:
- Geographic variations in Medicare spending are often viewed as indicators of inefficiency.
- Policymakers require a deeper understanding of factors influencing per-beneficiary spending across regions before implementing cost-containment strategies.
Purpose of the Study:
- To analyze the drivers of geographic differences in Medicare spending per beneficiary.
- To determine the extent to which beneficiary health and healthcare resource supply explain spending variations.
Main Methods:
- Utilized Medicare Current Beneficiary Survey data from 2000-2002.
- Employed multivariate regression models to assess individual and area-level determinants of spending.
- Sequentially adjusted for demographic, health, and healthcare supply variables.
Main Results:
- Unadjusted spending was 52% higher in the highest-spending quintile regions compared to the lowest.
- After adjusting for health and demographics, the spending difference decreased to 33%.
- Health status explained 29% of the unadjusted spending difference; healthcare resource supply did not significantly alter this.
Conclusions:
- Reducing geographic Medicare spending disparities requires better data on the sources of variation.
- Developing methods to adjust for underlying beneficiary health differences is crucial for accurate cost comparisons.
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