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States' Health Care Spending Gap Grows, Says CMS Report

By Jane Norman, CQ HealthBeat Associate Editor

December 7, 2011 -- A state-by-state breakdown of estimated health care spending found that the gap is broadening between the highest-spending and lowest-spending states, an economist with the Centers for Medicare and Medicaid Services (CMS) said Wednesday.

Between 2005 and 2009, states with the highest level of personal health care spending per capita saw those levels grow faster than the national average, while states with the lowest levels grew more slowly, said Gigi Cuckler, an economist with the office of the actuary at CMS, in a webcast produced by the Kaiser Family Foundation.

While there was no overall reason cited as to why the gap broadened or recommendations on what to do about it, the report did note that spending grew fastest for hospital care per capita in New England, which includes some of the highest-spending states. There was also faster growth there for physician and clinical services per capita.

The researchers did find a clear economic trend. “The recent economic downturn slowed spending growth across all regions more severely than the 2001 recession,” the report noted. The Great Lakes, New England and far West—plagued by higher unemployment than other parts of the country—saw the greatest slowdowns in spending on health care.

In 2009, the states with the highest personal health care spending ranged from 113 percent to 136 percent of the U.S. average. They also tended to have older populations and higher incomes overall, the report said.

States with lower spending had lower per capita incomes, younger populations and more people without insurance — making them likely candidates for the Medicaid expansion or exchange subsidies under the health care law (PL 111-148, PL 111-152).

The highest-spending states in 2009 were Massachusetts, Alaska, Connecticut, Maine, Delaware, New York, Rhode Island, New Hampshire, North Dakota, and Pennsylvania. The lowest spenders were Utah, Arizona, Georgia, Idaho, Nevada, Texas, Colorado, Arkansas, California, and Alabama.

For some states, the reason for high costs is clear. Alaska and Maine both have some of the highest Medicaid spending per enrollee in the nation, the report said. Costs are high and health markets far-flung in Alaska, while Maine has a high share of people as a proportion of its population enrolled in the program for the needy and they consumed more health care than the national average.

Regional trends were also uncovered. “In 2009, the New England and Mideast regions had the highest levels of total personal health care spending per capita,” the report said. “In contrast, the Rocky Mountain and Southwest regions had the lowest levels of total personal health care spending per capita with average spending roughly 15 percent lower than the national average.”

Personal health spending as defined for the study included total medical expenses for private insurance, Medicare and Medicaid, but excluded administrative expenses.

Jane Norman can be reached at [email protected].

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