The Washington Post just completed a three part series on Medicare that highlighted problems with quality control, inefficiency, and disincentives to improve. For instance:

… higher spending is related to the number of specialists, hospital beds and technology available. “If you have twice as many docs in a community,” said Wennberg, “you end up with twice as many office visits.”

Yet most high-spending states rank near the bottom in quality of care, Medicare data show. Louisiana ranked 50th in quality yet first in Medicare spending in 2001, the most recent year available. New Hampshire was first in quality but 47th in spending.

…

Wennberg said differences in spending from region to region aren’t caused by varying rates of illness. Rather, they are usually linked to the kinds of extra health services provided in the high-spending areas, such as visits to specialists, tests, costly MRI and imaging scans, and a plethora of minor procedures. The greater the supply, the higher the number of services delivered.

Miami, which has twice as many specialists as the national average, more hospital beds and more technology, is far more expensive than Minneapolis — a city in a low-cost, high-quality state — even after adjusting for differences in patients’ age, sex, race and medical condition.

In 2001, a traditional Medicare patient in Miami used $10,113 in services, on average. A Medicare patient in Minneapolis: $4,888.

Doing more doesn’t necessarily mean doing better, according to Wennberg’s colleague, Elliott S. Fisher, who has found that patients in high-spending regions fare no better than those in lower-cost regions. “There is just no evidence that doing more helps,” he said. “At best, you do the same, and in some cases you actually do worse.”

There are similar problems in Medicare HMOs — where, in theory, providers are paid a flat fee to keep patients healthy. But the fees vary widely and are unrelated to performance — so the Post shows an example of a mediocre Florida HMO being paid 50% more per patient per year than a highly rated Minnesota plan ($12k vs $8k).

The problems can be generalized to the Soviet-style focus on production — in this case, treatments performed. Outcomes and quality — factors that an individual armed with sufficient information would consider — are ignored.

Not to mention that in a true marketplace, those overpopulated Florida docs would be earning less than their Minnesota counterparts.

The result of this perverse system: the article says that estimates of how much of Medicare’s $300b / year spending is wasted on unnecessary or inappropriate care range from 33% - 40%.

Yet Sheila Kuehl and others would have you believe that a system like this should be extended to all Californians?

No thanks.

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H/t: Vox Baby via Marginal Revolution

Technorati Tags: government waste

This entry was posted on Wednesday, August 3rd, 2005 at 9:43 pm by A Senior Administration Official and is filed under Your Tax Dollars In Action. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.