Expect sizable savings due to healthcare changes

November 1, 2009

A new study reported in the New England Journal of Medicine (9/9/09) supports the Obama administration's claim that improving the efficiency of healthcare delivery would make it possible to cover the uninsured without rationing needed care or raising taxes.

A new study reported in the New England Journal of Medicine (9/9/09) supports the Obama administration's claim that improving the efficiency of health care delivery would make it possible to cover the uninsured without rationing needed care or raising taxes.

Jason M. Sutherland and colleagues analyzed 2004 and 2005 data from the Medicare Current Beneficiary Survey, a nationally representative sample of almost 15,500 Medicare enrollees that provides detailed information on individuals' health status, income, health care use, and Medicare spending data, which were adjusted for price differences among regions. As expected, the analysis showed that sick people require far more care than healthy people (with a six-fold difference in cost) and that low-income people are sicker and account for greater health care expenditures.

But the considerable regional differences in price-adjusted health care spending were attributable primarily to discretionary decisions by physicians, not by patients in higher-spending regions being poor or sicker. Compared with patients in the lowest-spending regions, those in the highest-spending regions spend more time in the hospital, visit physicians more often, and undergo more magnetic resonance imaging procedures and computed tomography scans.

They also note, however, that avoiding expensive procedures often requires more practitioner time-for example, by treating a patient with worsening heart failure on an outpatient basis with medication adjustment instead of authorizing a hospitalization. Eliminating unnecessary care, they say, therefore requires reorganizing the delivery system to ensure that providers aren't penalized for providing what is often the better alternative for their patients.