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?