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McAllen and El Paso Redux: New Evidence from the Insured Under-65 Population

Last year, Atul Gawande wrote in the New Yorker about the remarkable differences in health care spending for two Texas cities: McAllen and El Paso.  In 1992, according to the Dartmouth Atlas, the two cities were essentially identical with respect to per capita Medicare expenditures.  By 2007, McAllen’s spending had surged, with overall expenditures nearly twice as high as in El Paso.  Dr. Gawande visited the two communities, and brilliantly documented a culture of entrepreneurship among McAllen physicians that seemed to explain their elevated rates of hospital admissions, end-of-life care, and home health care.

But what about the under-65 population?  Dr. Gawande spoke with two independent firms about their measures of under-65 utilization, and found generally higher rates in McAllen.  My colleague Thomas Bubolz studies the under-65 Medicare population – primarily people on Social Security Disability Insurance — and his preliminary results also point to much higher utilization in McAllen compared to El Paso.   Another study using national data by Michael Chernew and colleagues (here) found a strong positive correlation between utilization rates for Medicare and the under-65 population insured by large firms.  (That they also found a negative correlation between Medicare spending and the negotiated price per procedure in the under-65 population points to another source of regional variation: market concentration.)

So when Luisa Franzini and Osama Mikhail, professors at the University of Texas School of Public Health, first offered me the opportunity to work with them using Blue Cross-Blue Shield data on under-65 spending in Hildago (McAllen) and El Paso Counties, I had strong expectations that we’d end up with  pretty much the same result.

I was wrong.  In a recent Health Affairs article, we found that, on average, overall spending per patient in McAllen was about 7 percent below that in El Paso.  Granted, we found the familiar Medicare utilization patterns among people over age 50: McAllen admission rates were 89 percent higher than those in El Paso, and overall expenditures 23 percent higher.  But outpatient visits and spending were lower across the board in McAllen, as was total spending for those under age 50.  What was going on?

We ruled out a variety of hypotheses – that the Medicare differences weren’t measured properly or biased by lack of illness or price adjustment (they’re not).  Indeed, the over-65 population in McAllen, comprising many retirees attracted by warm weather and low living costs, are a remarkably healthy group with mortality rates lower than those in Provo, Utah.

Some of the difference is explained by types of disease: there is virtually no home health for privately insured patients under age 50, and end-of-life care is a rarity.  Typical hospital admissions for the younger population — births and automobile accidents – are more urgent and entail far less discretion on the part of the physician. But when the diseases are similar, such as circulatory disorders, the data are at least consistent with another story:  physicians behave differently depending on who is paying the bill.  Blue Cross – Blue Shield includes preauthorization requirements and utilization review, but Medicare does not.   This gives a different interpretation to the regional variations story – it’s not just about enthusiastic physicians in a region doing more for all their patients, it’s about health care providers who are most enthusiastic when Medicare is paying the bill.

While the evidence supporting this hypothesis is circumstantial, the results are consistent with another recent study by Tomas Philipson and colleagues suggesting that private insurance payment mechanisms attenuate variations.  And importantly, we cannot generalize from a sample of two Texas counties to say anything about overall variations in the under-65 population.  Certainly, Richard Cooper’s work suggests as much unexplained variation in health care expenditures for the under-65 population (and for non-Medicare spending) as the Dartmouth Atlas finds in the Medicare population.  We hope that our ongoing research looking at all Texas counties will shed light on this question.

Despite spending more than 17 percent of GDP on health care, we are at a loss to even document variations in prices and quantities of services provided in the under-65 population.  This is because of a paucity of data; private insurance companies are hesitant to release data about their negotiated prices, and population-based measures of utilization can be problematic.  But it is also important not to become too distracted by our ignorance of under-65 regional insurance markets.  The key financial threat facing the U.S. federal government today is out-of-control Medicare spending growth.  Whether Medicare expenditures are positively or negatively associated with under-65 spending is less important for the federal deficit than is developing new policies to contain excess Medicare cost growth.

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EpiDocRichard DTimmaggiemaharAl Kennedy Recent comment authors
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John R. Morrow
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@ Matthew Holt, What a coincidence, on December 7, Mr. Skinner admits to major flaws in the Dartmouth Atlas conclusions citing absence of all-payor data in drawing conclusions. This of course is something dozens have commented on for over a year. And now on December 15, Dartmouth announces a pioneering collaboration with other provider organizations to seek insights from all-payor data. Well Matt, and those who buy Dartmouth’s spin…the only thing pioneering about this initiative is that you would to have been lost on a wagon train crossing the continental divide to not be aware of the enormous collaborative efforts… Read more »

EpiDoc
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EpiDoc

“End of life utilization” isn’t even a type of utilization. It’s only defined by the fact that someone died at some future date. There is no billing code for, or clinical service (except maybe hospice) that is for ‘end of life’. But more important, Dr. Skinner now explains that the regional variations in spending are insight into, well, that there are regional variations. In his post now he explains that what high spending regions share is as follows: “But the common feature of these regions is a health care system that appears optimized to soak up vast dollar amounts from… Read more »

John R. Morrow
Guest

End of life utilization is a good snapshot of end of life utilization, period! And by the way, not only do all chronically ill patients eventually die…all humans eventually die regardless of their condition at death.
Now that you have “found” all-payer data, maybe you will also look at beginning of life care, but please don’t jump to conclusions too fast as people’s whole lives are in front of them. Rationing takes on a different meaning when the NICU is involved.
Cheers.

Jon Skinner
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Jon Skinner

Regarding end of life care — it turns out that end of life utilization is a good snapshot of spending on the chronically ill, many of whom die. It is highly correlated with all kinds of utilization measures in the Medicare population. Whether these measures are also correlated with fertility rates (and hence the incidence of maternity stays among women in their 20s) or trauma rates among men in their 20s, is less clear. Great question about whether McAllen is like other high-cost communities. LA is high cost largely because of heavy use of hospitalization services, while NYC is high… Read more »

EpiDoc
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EpiDoc

Other commenters have already noted many of the contradictions in Dr. Skinner’s posting. Medicare different than the under 65 but also the same for 50 and above. If that’s due to Blue Cross prior authorization then do they shut that off at age 50? Utilization in the Chernew paper is inpatient only – but this is inpatient and outpatient. The two don’t contradict each other. But most worrisome – Skinner seems here to be saying that ‘end of life care’ is a type of care, distinct from other types of care given to the younger insured. That assertion contradicts 20… Read more »

Richard D
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Richard D

Tim,
I share your view of how and why ‘the left’ invested in the Dartmouth thesis. I think that the problem with the Dartmouth work is its prescriptions not their descriptions. Buz Cooper, on the other hand, managed to get his own exhibits confused. There’s no ‘MAYBE BC is right’

Margalit Gur-Arie
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Tim, Since the vast majority of the “maybe” came from me, I would like to clarify that I am as “Left” as you can get without waving red flags. I am not vision-invested in anything and I don’t believe in grand designs. I do however believe in rigorous science and fact based conclusions. I don’t think we have enough science to draw definitive conclusions regarding the reasons for geographical variations in spending, or any variations between public and private payers, let alone assigning responsibility to providers, payers and/or patients. I do believe that these phenomena should continue to be objectively… Read more »

Tim
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Tim

I wish I had a nickel for every “maybe” on this page. A rational person would conclude we don’t yet know why we see what we see in the data.
MAYBE what Guwande said about a “money culture” wasn’t true. MAYBE the explanation for “geographic variation” is something else, like…poverty? MAYBE Buzz Cooper is right.
The Left is vision-invested in the Dartmouth thesis, because they need to get control of the private money to make their grand design come true. The most conflicted voices in this debate are the wonks in the health care think tanks.

maggiemahar
Guest

Jon– A very interesting discussion . . . As you say at the end of your post, it is most important that we get a handle on reining in Medicare spending. That is driving the deficit. And the over-65 population is most vulnerable to overtreatment because a)they are more worried about their health b) they have more time to visit specialists, and undergo tests and procedures and c) Medicare does not require pre-approval before visiting a specialist. If pre-approval is needed and you go to your primary care doctor first to talk about your angina, he may recommend a change… Read more »

Al Kennedy
Guest

Interesting Blog, even though this was not what i was looking for (I am in search of clinics like this one> http://www.ccsviclinic.ca/ )… I certainly plan on visiting again! By the way, if anyone knows of a good clinic that does CCSVI Screenings? BTW..thanks a lot and i will bookmark your article: McAllen and El Paso Redux: New Evidence from the Insured Under-65 Population…

John R. Morrow
Guest

MEMO TO WASHINGTON:
The Kool Aid was not safe to drink.
MEMO TO ANALYSTS:
Keep up the good work. Better information leads to better policy.
MEMO TO DARTMOUTH:
Thank you for your admission, the spin was sickening.
MEMO TO THCB:
Thank you for the platform to inform and debate.
MEMO TO ALL:
Let’s get back to work, we have a lot to accomplish.

health chrisranjana.com developers
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The spending for the under 65 population is less because of the fact that utilization management mechanisms that exist for private insurers may prompt some physicians, who might otherwise overuse certain services, to exercise more restraint.
The difference is spending can also be attributed to the type of diseases. the younger people are more affected by acute diseases and road traffic accidents, whereas the older people with chronic diseases involving life style modification

Margalit Gur-Arie
Guest

“It may very well be….” And that is the problem in a nutshell. It may very well be that McAllen has a “money culture”, and it may very well be that those “greedy” doctors are taking advantage of Medicare, but it may very well be that things are different and we are looking at an altogether different issue. The HA article acknowledges that the HCCs in McAllen are higher than the national average. It may be that HCCs are manipulated, as they often are, but it may also be that the docs in McAllen are diagnosing earlier and more often… Read more »

steve
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steve

Aaron Carroll’s analysis has a lot of merit. It may very well be that when patients hit 50, kind of a magic number, they have much more exposure to specialists and more procedures. It would fit well with the aggressive hospitals, as portrayed by Gawande, in the area.
http://theincidentaleconomist.com/wordpress/come-back-to-texas/
Steve

James
Guest
James

Did you look at any Medicaid data?