Demography drives Medicare disparities

New research by the Brookings Institution suggests that socioeconomic factors can account for most of the geographical variation in Medicare spending.

These findings contradict previous research that claimed geographic differences in “practice styles” are the main reason for differences in Medicare spending.

Louise Sheiner, Brookings senior fellow and director of the Hutchins Center on Fiscal and Monetary Policy, says her research specifically challenges the Dartmouth Atlas of Health Care’s contention that medical practice styles – that is, “the extent and intensity of medical interventions” – are randomly distributed.

Her conclusions in “Why Geographic Variation in Health Care Spending Can’t Tell Us Much about the Efficiency or Quality of our Health Care System,” call into question “the claim that the U.S. could save up to $700 billion in health care waste and inefficiency if all providers were to emulate the practices of low-costs states.”

Sheiner employed a state-level approach in her research, in contrast to the individual-level approach used by Dartmouth researchers. This enabled her to determine that “states with similar demographic characteristics have similar levels of real beneficiary Medicare spending.”

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