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State variations in Medicare expenditures

R L Kane1, B Friedman

  • 1Division of Health Services Research and Policy, University of Minnesota School of Public Health, Minneapolis 55455, USA.

American Journal of Public Health
|November 14, 1997
PubMed
Summary
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Medicare spending varies significantly by state, driven by service utilization rather than cost per service. Factors like HMO penetration and demographics influence these disparities.

Area of Science:

  • Health Economics
  • Public Health Policy
  • Healthcare Management

Background:

  • Medicare expenditures exhibit considerable variation across different states.
  • Understanding the drivers of these expenditure variations is crucial for effective healthcare policy.

Purpose of the Study:

  • To examine the factors contributing to variations in Medicare expenditures among US states.
  • To identify key determinants of per-enrollee Medicare spending at the state level.

Main Methods:

  • Utilized 1992 Medicare data comparing expenditures, service use, and payment rates across states.
  • Employed weighted least squares regression analysis to model total Medicare expenditures per enrollee by state.

Main Results:

Related Experiment Videos

  • State-level Medicare expenditure variations are more influenced by the number of service users and service units per user than by payment per service unit.
  • Key predictors of Medicare expenditures per enrollee include HMO penetration, urbanicity, hospital bed supply, elderly mortality, physician assignment rates, and primary care practitioner prevalence.
  • Significant interactions were observed between urban elderly population and primary care physicians, and between Black elderly population and nursing home bed supply.

    • Conclusions:

    • The disproportionate distribution of Medicare expenditures across states warrants attention.
    • Policy decisions regarding Medicare cuts or managed care reliance should consider these existing expenditure variations.