Payer-Specific Factors Drive Regional Health Care Spending

Discrepancies in regional health spending are not limited to private or public payers

Researchers from Yale, Stanford and Dartmouth conducted a nationwide analysis of Medicare, Medicaid and private insurer spending over a small area, looking to see if certain areas have low spending in all three or if other factors drive spending . Medicare, Medicaid and private insurers covered 14.2%, 19.8% and 49.6% of the country’s population, respectively, in 2019.

The study, published in Open JAMA Networkanalyzed expenditure data for over 100 million people and shows that while health expenditure per payer varies widely across regions, there is almost no region that simultaneously has low health expenditures. Medicare, Medicaid, and private insurers or have universally high spending in all three payers.

The researchers said distinct factors appear to drive regional variations in each payer segment. This is important because in the past, policy makers have identified effective health systems by region based solely on health insurance. The study data shows that policy makers cannot understand regional performance without looking at all three payer segments.

What a region spent on privately insured had a low correlation (21%) with what was spent in the region on Medicaid beneficiaries and a 2% correlation with what was spent on Medicare beneficiaries, according to the study. There was also only a 16% correlation between what an area spent on the Medicaid program and what was spent on the Medicare program.

The researchers say this shows the United States has the equivalent of three different healthcare systems, and to increase efficiency, payer-specific policies will need to be developed.

According to the study, the Medicaid-covered and privately insured populations show greater variation in spending across regions than the Medicare population. Prices for care paid by private insurers and Medicaid are generally market determined and vary widely by region, while the federally administered Medicare program relies on regulated payments to health care providers. .

There was a substantial correlation in the regional use of health care services among payers, according to the study. Spending was not strongly correlated across payers, but care utilization was.

Spending variations by segment are specific to each primary payer. For private insurance, regions with high prices tend to have high expenses. For Medicare, regions with higher spending have more medical specialists per capita. For Medicaid, regions with higher spending have more hospital beds and births per capita, the researchers found.

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