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Study: Northeasterners and Alaskans Spent More on Health Care than Other States

By Sasha Bartolf, CQ Staff

September 18, 2007 – A government report released Tuesday found that an individual's income, the number of people in the area who are uninsured, and the concentration of physicians within that area significantly influence regional health care costs.

The Centers for Medicare and Medicaid Services study, published by Health Affairs, found that people in the New England and Mideast regions spent 20 percent more in 2004 on health care services than the national average. Alaska and the nine northeastern states, Massachusetts, New York, Connecticut, Maine, Delaware, Rhode Island, Vermont, West Virginia, and Pennsylvania, had the highest concentration of physicians to population and the lowest share of uninsured populations, in addition to high income levels among residents.

Several of those states also had more generous Medicaid programs, which led to higher health care spending. In New York, the per-enrollee Medicaid spending was $10,173, and accounted for nearly 32 percent of total health spending, nearly double the national average.

Anne Martin, an economist at CMS' Office of the Actuary and co-author of the report, said in a press release, "Most of these states have consistently had the highest spending over time . . . but there are several similar characteristics among these states." For example, four states—Massachusetts, New York, Delaware, and Connecticut—had high per capita income. Six states, Massachusetts, New York, Connecticut, Rhode Island, Vermont, and Philadelphia, had among the highest concentrations of doctors to population and among the lowest representation of uninsured individuals, according to study authors.

However, the number of people enrolled in Medicaid was not found to influence spending levels. New York was among the highest Medicaid spenders, while having a larger-than-average population who received Medicaid. Unlike New York, New Mexico had more Medicaid recipients than the majority of states, but spent little on health care compared to the national average.

Meanwhile, New Mexico and other states in the Southwest and Rocky Mountain regions spent less than the national average on health care. For instance, rural areas tend to have fewer hospitals and physicians than densely populated states in the Northeast. The cost of living also is less in these areas than in the Northeast and Mid-East regions, affecting the going-rate for health care. But the lower per capita personal income of the people in these regions also meant they had less money and access to health services than those in other states, the study found.

The report also stated that per capita spending on prescription drugs grew faster in 1998–2004 than in 1991–1998. This is attributed to expanded prescription drug coverage, lower co-payments, an influx of "blockbuster drugs"—drugs that make more than $1 billion in revenue—and expanded Medicaid and state-sponsored coverage for drugs.

John Holahan, director of the Urban Institute's Health Policy Center, said that politics and budget considerations would make eliminating the health care variations from region to region difficult. He warned that if no federal action is taken, low-income people will "continue to be treated very differently depending on where they live."

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