The United States can transform its Medicare deficit into a surplus and expand coverage to the uninsured by pushing regions with high health care costs to adopt the policies of regions with lower costs, according to a study conducted by a team of Dartmouth Medical School researchers at The Dartmouth Institute for Health Policy and Clinical Practice. The study examined regional differences in health care spending trends and how these differences contribute to the country's rising health care costs.
TDI has examined regional variations in health care spending for almost 20 years. Studying spending over time provides researchers with "an entirely new" perspective on how to slow increases in health care costs, medical school and economics professor Jonathan Skinner said. Skinner conducted the study with DMS professor Elliott Fisher, director of TDI's Center for Health Policy Research, and professor Julie Bynum.
"A lot of the concern now for the fiscal instability of Medicare is based on the fact that Medicare and health care costs are projected to grow much faster than [the United States'] GDP," Skinner said. "The question we looked at is: 'What are examples of areas that have been able to grow at sustainable rates and what can we learn from taking a closer look at those?'"
If health care costs continue to rise at projected rates, the country will face a $660 billion deficit in Medicare spending by 2023. Policymakers have yet to address this "unsustainable" growth rate effectively, Skinner said.
High-spending regions can implement policy changes to reduce this deficit, the study found.
"We're saying that if we can get areas, such as Miami, which currently spends more than double the national average per patient, to emulate these lower-cost regions, we can turn looming deficits in the Medicare program into a huge surplus," he said.
The study's authors are optimistic about Medicare spending reform, Skinner said.
"There's no doubt we have the potential to rein in health care costs in the future," Skinner said. "In order to do this, we need to identify regional health care systems that are working and try to reproduce these elsewhere."
Current policies give doctors incentives to perform additional, unnecessary procedures, instead of concentrating on the quality of the care provided, Skinner said.
"It may not be any individual doctors' fault, but the system is designed to encourage spending growth," he said. "We don't pay doctors to save money or provide higher quality care. We pay them more the more they do."
The study confirmed previous research that found that spending increases are often accompanied by decreases in the quality of care.
"It's like if you paid a dysfunctional contractor to fix your house -- it would cost you more, but he'd do a worse job," he said.
President Barack Obama's administration has expressed interest in decreasing variations in spending to control health care costs as a way to reform the country's Medicare system and control the overall budget, Skinner said.
Kenneth Baer, associate director of communications and strategic planning for the federal Office of Management and Budget, stressed the importance of researching variations in health care costs and outcomes.
"Research into what works in health care is critical to getting health care costs under control," he said in an e-mail to The Dartmouth. "That's why the Recovery Act makes an unprecedented investment into comparative effectiveness research."
Obama has established a reserve fund of $634 billion in the 2010 fiscal year budget as a down payment for comprehensive health care reform, he added.
The Dartmouth study found that the United States could theoretically insure the 46 million Americans currently without health care coverage, although doing so will be difficult, Skinner said.
"You would have to change the way doctors think about their practices," he said. "There's so much inefficiency and waste in the system, though, that if you could squeeze that out, you could pay for health care for the uninsured in this country."
The study was published in the New England Journal of Medicine on Feb. 26.
Bynum and Fisher were unavailable for comment by press time.
