Can regions that spend a lot on health care help pay for reform?

As our readers already know, some parts of the country spend a lot more on health care than other parts—but don’t get better results. John E. Wennberg, M.D., M.P.H., Elliott Fisher, M.D., M.P.H., and their colleagues at the Dartmouth Atlas of Health Care, who have spent several decades documenting and researching this issue, have estimated that if every place in the U.S. practiced the same kind of medicine as the most frugal places, we could cut costs by as much as 30 percent and still end up just as healthy.

The prospect of such whopping savings, according to The New York Times, has caught the attention of some members of the Senate Finance Committee—the group that’s writing legislation to reform our health-care system. They’ve proposed, according to the Times,

… taking tens of billions of dollars of Medicare money away from doctors and hospitals in high-cost areas and using it to help cover the uninsured or treat patients in lower-cost regions.

As much as we admire the Dartmouth work, we don’t think that an abrupt across-the-board spending cut in profligate regions like New York or Florida is the best approach.

The best explanation for why we think this is so this comes from Robert Berenson, M.D., a health researcher and former Medicare official who commented in the Times about the Dartmouth work.* Speaking by phone from Europe, he told me, "What you end up with is that the prudent doctors are still prudent, but getting less income, and the ones who are generating excess volume are going to generate still more in the face of price restrictions."

A better plan, in our view, is to change the financial incentives in the system as a whole, rewarding the kind of efficient medical care already practiced in low-spending regions. These regions use primary-care doctors to coordinate care and keep people healthy and out of the hospital, whereas expensive regions overtreat patients with multiple specialists and lengthy hospital stays that add to the cost without improving outcomes.

Look up your local hospitals in our free hospital rankings site to find out what style of medicine they practice.

Policy wonks among you should check the HealthBeat blog for an expanded discussion of this whole issue.

* Berenson said his comments about the Dartmouth research have mainly to do with technical disagreements over methodology. "Our research suggests that geographic area variations in spending persist but only about half as much as in the Dartmouth." He added that his comments "certainly haven’t been intended to play into opposition" to health reform.

—Nancy Metcalf, senior program editor

See our new Guide to Health-Care Reform to find out what we're doing to help fix the broken health-care system and for answers to your questions on health insurance, patient safety, and comparative effectiveness.

Comments

[Nancy Metcalf]

Mr. Thompson, you’ve actually answered your own question. South Florida is one of those places that practices aggressive, most likely wasteful medical care. Our online hospital tool ( http://www.consumerreports.org/health/doctors-and-hospitals/hospital-home.htm ) shows that the hospitals in the Miami service area range from the 84th to the 98th percentile in aggressiveness. The government is already struggling to cover profligate places like this, even without adding subsidies for tens of millions of under- or uninsured younger adults. It’s why we need to reform our current flawed system that rewards hospitals and doctors for overteatment. Your hometown, as you’ve observed personally, is unfortunately also an epicenter for Medicare fraud, a multibillion-dollar problem for which the government recently set up a special task force ( http://www.hhs.gov/stopmedicarefraud/ )

Nancy Metcalf
Senior Program Editor

[Charles Thompson]

In South Florida a great deal of the cost of Medicare is downright fraud. Drivers are assigned to vans. They pick up folks that look like they might be Medicare recipients. They work with Doctors and clinics that take Medicare information from the patient. Many of the patients do not have real health issues. And most do not speak or understand English. They make a claim to Medicare and include as many ailments as they think they can get away with. The patient, the driver and the Doctor each take their share of the claim. And they never examine the patient.

I am on Medicare and have a BCBS supplement. The government takes $98.00 a month from my SS. There is a $135.00 co-pay. My supplement is $260.00 per month. That comes to $4431.00 a year. Add my co-pays and deductibles, probably, $1200.00 or so a year. That is $5,600.00 a year. (Such an entitlement) In the meantime I paid into my Medicare account during my working years. How on earth can the government cover a low income family without reducing everyones benefits or really going broke trying to provide every American with health care? My social security is roughly $19,000 a year. $5600 is about 28% of my Social Security. Everyone associated with universal health coverage must be
smoking dope.

[JLT]

The problems associated with the healthcare all started in the 60's when the insurance companies started to run healthcare. The only solution is to have a combination of non-profit companies and government working together. The for-profit healthcare companies will continue drive the costs up and up without care in the world and deny care to those who truly need care.