As the healthcare debate moves into second gear, policymakers are searching for ways both to increase access and reduce costs. Some believe there is a painless way to cut up to 30% in spending by eliminating waste and by requiring physicians in the highest-cost areas of the country to adopt the practices of the lowest-cost regions.
Many news stories and the Obama administration have cited a June article by Dr. Atul Gawande in the New Yorker magazine, as well as research done by the Dartmouth Atlas Project. Both assert that regional variations in Medicare expenditures occur, in great part, as a result of over-utilization of services and procedures. Already, legislation has been introduced in Congress that would reduce Medicare payments to places such as Los Angeles and redistribute the dollars to parts of the country that are deemed "more efficient."
We agree that every effort should be made to curtail spending that does not show a proven health benefit. However, we disagree that policymakers can extrapolate research data from one region to arrive at conclusions regarding another, very different region. This overly simplistic analysis could have real-world consequences, including further diminishing access for the urban poor and to those middle-class residents who live near pockets of significant poverty.
Investigators from Dartmouth used Medicare bills submitted by doctors and hospitals for patients who died and compared spending across geographies and across hospitals. The theory is that because all the patients died, any variation in spending must be waste. They then extrapolated these findings to identify high-spending geographic regions and high-spending hospitals for all Medicare costs.
Voila: a map in which Minnesota is the paragon and Miami and Los Angeles are the profligates. We dug a little deeper into relevant state health and hospital-use data for Los Angeles County. What we found was quite striking and pointed to one of the key differences in costs and outcomes for healthcare paid by Medicare.
The per capita income in L.A. County is $24,705; in the state of Minnesota, it is $37,373. More than 38% of L.A. County citizens live below the poverty line, 57% are black or Latino, and 24% are uninsured. In Minnesota, 11.6% live at or below the poverty line, 9% are black or Latino, and only 8.8% are uninsured. In L.A. County's core -- Central and South Los Angeles -- the differences are even more striking: 56% of the residents are at or below the poverty line, 80% are black or Latino, and 41% are uninsured.
