Healthcare costs more closely aligned for privately insured patients versus those on Medicare

New research published in the December issue of Health Affairs finds that the per capita healthcare cost differences described in a highly publicized 2009 New Yorker article (Large Medicare Spending Variations in Two Texas Cities) do not apply to all patients.

The earlier article, which compared Medicare spending in McAllen and El Paso, Texas, identified variances in per-member spending that neared 90%. However, the recently published data, which also focused on per capita spending in the same cities, revealed that although big differences do exist among patients whose care is covered by the Medicare program, only a 7% difference in annual costs exists among patients with private insurance.

Lead author Luisa Franzini, PhD, says that the more consistent numbers among non-Medicare patients may have to do with physicians cautiously managing the care of patients with private insurance: ”The fact that these utilization management mechanisms exist may prompt some physicians who might otherwise overuse certain services to exercise more restraint.”

As did the authors of the New Yorker article, Franzini and colleagues identified much greater costs among Medicare patients in McAllen, particularly for inpatient care (+63%), outpatient care (+32%), and Part B professional services (+65%). And the average cost of home healthcare in McAllen was not only 4.63 times greater than in El Paso, it also was 7.14 times greater than the national average.

But when the researchers examined the cost of healthcare for patients aged fewer than 65 years, the averages were about the same for both cities. The only big difference was between patients aged fewer than 25 years who use professional services (+51% in McAllen) and the admissions (+89% in McAllen) and per-patient inpatient spending for this group (+117% in McAllen).