Study details U.S. health spending by region

A new study by researchers at Yale, Stanford, and Dartmouth provides the first nationwide, small-area analysis of the variation in spending by the three main funders of health care in the United States: Medicare, Medicaid, and private insurers. The researchers’ goal: to see whether there are regions that have low health spending by each of the three payers simultaneously or whether distinct factors drive health spending variation among the payers.

The study, published July 20 in JAMA Network Open, analyzes spending data for more than 100 million individuals and shows that while health spending per payer varies significantly across regions, there are almost no regions that have simultaneously low spending by Medicare, Medicaid, and private insurers or that have universally high spending across all three payers. In fact, the researchers found that distinct factors appear to be driving regional variation in health spending across each payer segment of the U.S. health system.

The finding has significant public policy implications because it suggests that policymakers should focus on payer-specific interventions that target individual sources of waste rather than searching for silver-bullet interventions, according to the researchers.

“In the past, policymakers have identified particular regions as having efficient health systems based solely on care delivered through Medicare,” said study co-author Zack Cooper, an associate professor of health policy at the Yale School of Public Health and of economics in the Faculty of Arts and Sciences. “By analyzing data from all three dominant payers, we show that analysts cannot understand the overall performance of regions by studying only one payer or learn about a model for the country by studying one region.

“Our findings suggest that payer-specific factors drive health spending across and within regions, suggesting that policymakers should focus on payer-specific strategies to increase efficiency in the U.S. health care sector.”

Olivia Stiegman, a pre-doctoral fellow for Yale’s Department of Economics and Tobin Center for Economic Policy, and Chima D. Ndumele, an associate professor of public health at the Yale School of Public Health, are co-authors of the study. The other co-authors are Becky Staiger of the School of Medicine of Stanford University and Jonathan Skinner of Dartmouth College.

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