Huge inefficiencies in the U.S. healthcare system are harming the nation's ability to expand access to care, according to a new analysis of Medicare spending by researchers at the Dartmouth Atlas Project.
Experts have blamed the growth in spending on advances in medical technology, but the study's authors say differences in growth rates across regions show that advancing technology is only part of the explanation.
Instead, the authors argue that the differences in growth are largely due to discretionary decisions by physicians who are influenced by the local availability of hospital beds, imaging centers and other resources and a payment system that rewards growth and higher use.
"To paraphrase a line from the gun control debate: Technology doesn't drive the growth in healthcare spending; people do," said the study’s lead author, Elliott Fisher, MD, principal investigator for the Dartmouth Atlas Project and director of the Center for Health Policy Research at the Dartmouth Institute for Health Policy and Clinical Practice.
"The good news is that in many regions, spending is growing relatively slowly. Reformers can learn from these regions and put in place policies that … encourage high-cost, high-growth regions to change their ways."
In their recently published New England Journal of Medicine study, Fisher and his colleagues calculated the growth rate of Medicare spending per enrollee from 1992-2006. They also analyzed spending differences in 306 local healthcare markets and all 50 states.
Nationally, Medicare spent an average of $8,304 per enrollee in 2006, and national spending grew at a rate of 3.5 percent annually from 1992 to 2006. Among states, New York was tops in spending per enrollee, at $9,564. Hawaii was lowest, at $5,311.
The growth rates and spending per enrollee do not always track, Fisher said, as some high-growth states started from a low base and vice versa. Nebraska had the highest growth rate, at 5.3 percent, although it was 39th on spending per enrollee, at $6,922. In contrast, the District of Columbia had the lowest growth rate, at 1.6 percent, although it was 29th in spending, at $7,551 per enrollee.
The researchers project that, at current spending rates, Medicare will be $660 billion in the red by 2023. But by reducing the annual growth in per capita spending from the national average of 3.5 percent to 2.4 percent – the rate in San Francisco – Medicare could save $1.42 trillion and turn the deficit into a healthy surplus.
"The good news is that small differences, because of compounding, can make an enormous difference for the long-term solvency of Medicare and our ability to expand coverage for the uninsured," said Jonathan Skinner, chairman of the economics department at Dartmouth College and one of the report’s co-authors.
Skinner said he and his colleagues are calling on physicians to lead an effort to reform how the United States delivers and pays for healthcare to bring spending under control. If that happens, he said payment systems could shift from purely volume-based payments to systems that “foster accountability."
"This is an opportunity for physicians to lead," said Julie Bynum, MD, assistant professor of medicine at Dartmouth Medical School and a report co-author. "Doctors ... will need help from payers and policy-makers. Physicians operate under the rules of a system that is rigged to reward high-cost care."