Comparing variation in Medicare and private insurance spending in Texas

A great deal of research has documented the wide variation in Medicare spending across different geographic regions in the United States. However, little research has been done on spending variation in the commercial sector. The objectives of this paper are (1) to compare variations in spending and inpatient utilization in the Blue Cross Blue Shield of Texas (BCBSTX) population and the Medicare population across 32 Texas regions and (2) to investigate if the pattern of widely varying Medicare spending but similar BCBSTX spending found in a previous analysis of El Paso and Hidalgo/McAllen exists across the state.

Retrospective study using 2008 BCBSTX and Medicare data. We used total spending per member/enrollee per month and inpatient admissions per 1000 members/enrollees.

After adjusting BCBSTX and Medicare spending for price and adjusting BCBSTX spending and utilization for age and gender, we computed coefficients of variation, standard deviations from the Texas means, and kernel density estimates for standard deviations from the mean to compare variation in BCBSTX and Medicare spending and inpatient utilization.

Results indicated that variations across Texas in total spending and inpatient utilization are similar in BCBSTX and Medicare both in level and in direction, as the correlations between Medicare and commercial spending and inpatient utilization are positive after excluding the Hidalgo/McAllen regions.

Over the state of Texas, regions of high Medicare spending also tend to be regions of high private insurance spending. McAllen appears to be an outlier for Medicare spending, but not for BCBSTX spending.