More health care isn’t always better, just more expensive.
Post-Dispatch file photo.
What’s the difference between a senior citizen in St. Louis and another in Kansas City? About $700, as far as Medicare is concerned.
In 2006, Medicare spent an average of $702 more per patient in St. Louis than it did in Kansas City. Why should this be?
Doctors in Kansas City are just as good and have access to the same technology as those in St. Louis. People in the two metro regions aren’t much different, either. They fall prey to the same illnesses and infirmities. But caring for them costs an average of about 9 percent more in St. Louis.
Even at that price, St. Louis (average spending: $8,306 per Medicare enrollee) is a bargain compared to McAllen, Texas ($14,946) or Miami ($16,351). Spending in Miami is a staggering 144 percent more than Minneapolis ($6,705). What gives?
Americans have the most expensive health care system in the world. That’s not so much about the quality as it as about quantity.
For the most part, people in other developed nations have access to the same treatments and drugs that Americans do. But when we get sick, we’re more likely to receive very intensive treatment, often involving expensive high-tech equipment and newer drugs or medical devices.
We expect it. Our approach to health care is like Oliver Twist’s approach to dinner: “Please, sir, I want more.”
But more health care isn’t necessarily better. In 2001, “over use” — too much medical care — was identified by the Institute of Medicine as one of three categories of medical error.
Some variations in Medicare spending reflect differences in the cost of living. New York is much more expensive than St. Louis; it’s not surprising that Medicare spending is higher there.
But San Francisco has a much higher cost of living than Miami. Yet Medicare spends about half as much in San Francisco as it does in Miami.
Researchers at Dartmouth College, who compiled those figures, have worked for decades to decipher the differences. People in some cities may be sicker than those in others, they believe. But even after adjusting for that, significant spending differences remain.
The most likely explanation: Roemer’s Law.
During the 1960s, researcher Milton Roemer noticed that the more hospital rooms that were built in Los Angeles, the more patients were admitted to fill them.
Health care often turns the law of supply and demand on its head. The more supply there is, the more demand it creates.
Dartmouth researchers found that they could predict how long a Medicare patient would be hospitalized just by knowing hospital capacity in the city where they lived. The more hospital beds, the longer patients are hospitalized and the more Medicare spends. That’s Roemer’s Law.
People who have a heart attack in St. Louis or Kansas City — or Miami or Minneapolis — get pretty much the same care. But in many other areas of medicine, treatment protocols are less clear. That’s where judgment comes into play.
Should a procedure that’s been shown to help patients who already had a heart attack be used on those who haven’t, but might? Which patients should be referred to specialists or admitted to a hospital?
Those are medical questions. But because of how we pay for health care, they’re also economic questions. Doctors and hospitals don’t get paid for managing care; they get paid for providing it. The more they do, the more they bill and the more they’re paid.
Roemer’s law also applies to expensive equipment such as MRI and CT scanners. The more there are, the more scans are done and the more it costs. Spending for those tests doubled over 10 years.
Medicare patients in expensive cities are hospitalized more often, see specialists more often and have more expensive tests.
What they don’t do is live longer or better. Many, in fact, have shorter lives.
Dartmouth researchers have shown that in high-spending regions, patients with heart attacks, hip fractures and colorectal cancer had worse survival rates than those in lower-spending regions. They also were less likely to get care that met established treatment guidelines. Even more surprisingly, both doctors and patients in high-spending regions say they face longer waits to see medical specialists or be admitted to a hospital.
Between one-fifth and one-third of all U.S. medical spending — as much as $800 billion — goes for care that does nothing to improve our health.
If all that extra spending doesn’t buy better care, why bother? Getting control of waste, and potentially harmful over treatment, is complicated. Among the solutions:
• Pay doctors for managing care, not just providing more of it.
• Increase research into which treatments and drugs work best.
• Encourage doctors and hospitals to adopt practices from the best-performing, most cost-efficient regions. That doesn’t mean scrimping on care; it means doing a better job of providing it.
The stakes are considerable. Dartmouth researchers estimate those reforms could save $1.4 trillion over the next 15 years. If you’re looking to pay for national health care reform, that’s a pretty good start.
“It may sound noble to say, ‘Damn economics, let us build up a decent world’” — through socialist programs, in short — “but it is, in fact, merely irresponsible.” ~ Friedrich Hayek