Medicare Expenditures Variation after Implementation of the Affordable Care Act

kimonKimon Bekelis, MD
Department of Neurosurgery, Thomas Jefferson University
Instructor, the Dartmouth Institute for Health Policy and Clinical Practice

A major goal of the Affordable Care Act (ACA) was to curb the rising cost of health care and rationalize Medicare spending across different areas of the US.1 For this to be achieved, the law integrated provisions aiming to improve access to care and reform the health care delivery system. This issue has been passionately debated and survived multiple legal battles.

Critics of the law point out that:

  • Health care premiums have increased for most beneficiaries; and
  • Some beneficiaries have been forced to change plans and providers.

Proponents of the ACA counter that:

  • Insurance coverage has expanded to more Americans; and
  • Medicare spending growth rate has stabilized over the past several years.
Figure 1. Rates of per-beneficiary Medicare spending nationally and among nine big states between 2009 and 2014.

Figure 1. Rates of per-beneficiary Medicare spending nationally and among nine big states between 2009 and 2014.

Although prominent health economists have recognized the mainly flat growth rate in health care spending in the years after the implementation of the ACA, they are not necessarily attributing this trend to a causal relationship with the enactment of the law.2 Figure 1 demonstrates flat rates of per-beneficiary Medicare spending nationally and among nine big states between 2009 and 2014.

Figure 2. Hospital Referral Region based map of the US showcasing the total Medicare spending per enrollee in 2010.

Figure 2. Hospital Referral Region based map of the US showcasing the total Medicare spending per enrollee in 2010.

The marked regional variation in the patterns of health care spending has attracted the interest of health economists over the years and was one of the seeds of the ACA. These disparities gave birth to The Dartmouth Atlas,3 a comprehensive analysis quantifying the differences in regional spending. For this project, the U.S. was divided into Hospital Referral Regions (HRR), based on referral patterns.

Medicare spending, adjusted for price and patient characteristics, demonstrated striking variation across the U.S. before the implementation of the ACA in 2010 (Figure 2). Medicare spending per beneficiary ranged from $6,911 to $13,824. These disparities have been attributed to inefficiencies in health care delivery, and differences in local marketplaces.4

Figure 3. Hospital Referral Region based map of the US showcasing the total Medicare spending.

Figure 3. Hospital Referral Region based map of the US showcasing the total Medicare spending.

Looking at the same parameters in 2014, several years after the implementation of the ACA, we observed similar regional variability in Medicare spending (Figure 3). Medicare spending per beneficiary ranged from $6,632 to $16,125. On its surface, this is surprising given the premise of the ACA to correct inefficiencies in health care delivery. However, the persistence of these disparities likely reflects the performance of established delivery systems, which would be resistant to national policy change. Alternatively, it could also reflect the impact of variable sociodemographic factors and differential burden of disease on Medicare spending, which was not affected by changes in legislation.

In conclusion, although the ACA included a number of provisions designed to encourage greater efficiency in Medicare, profound differences in Medicare per beneficiary spending in different parts of the country remain.

Editor’s Note: We encourage everyone to join the conversation online by using the hashtag #HealthReform.

References

  1. Fisher ES, McClellan MB, Safran DG. Building the path to accountable care. N Engl J Med. 2011;365(26):2445-2447.
  2. Skinner J, Chandra A. The Past and Future of the Affordable Care Act. JAMA. 2016;316(5):497-499.
  3. Practice TDIfHPaC. The Dartmouth Atlas of Healthcare. http://www.dartmouthatlas.org. Accessed February 11, 2017.
  4. Bekelis K, Roberts DW, Zhou W, Skinner JS. Fragmentation of care and the use of head computed tomography in patients with ischemic stroke. Circ Cardiovasc Qual Outcomes. 2014;7(3):430-436.
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