Healthcare executives point to higher incomes and a surplus of physicians as part of the reason why healthcare costs so much more in the Northeast than it does in other states.
A CMS report released last week found that the New England and mid-Atlantic regions of the U.S. spend more on healthcare than other parts of the country. Nine northeastern states, including Massachusetts, Maine, New York and Pennsylvania, in addition to Alaska spent 20% more than the U.S. average on healthcare services in 2004 ($6,345 per capita vs. $5,283).
Most of these states have consistently had the highest spending over time, says report co-author Anne Martin, an economist with the CMS Office of the Actuary. There is no one clear explanation, but there are several similar characteristics among these states. Higher spending was attributed to factors such as higher per capita personal income levels, as well as high concentrations of physicians to populationwhich can encourage more use of healthcareand lower shares of the uninsured.
By comparison, states in the Southwest and Rocky Mountain regions spent about $4,244 per person in 2004one-fifth less than the U.S. average. These states typically had lower-than-average per-enrollee Medicare and Medicaid spending and, because they tend to have more rural areas, less access to and availability of physicians and hospitals, the report stated.
In California, the per capita spending level was 12% below the national average in 2004. The state also had a below-average percentage of the population under age 65, an above-average share of the uninsured population, and a higher proportion of residents enrolled in HMOs in 2004 as compared with Massachusetts, which had the highest per capita healthcare spending ($6,683) of all states.
Oregon and Washington state do indeed spend less per capita than the majority of the United States, said Pam Vukovich, senior vice president and chief financial officer of Legacy Health System in Portland, Ore. Costs may be lower there because Western physicians are known to have conservative medical practices, Vukovich said. In addition, I believe costs are lower because Oregon does not have the number of stand-alone ambulatory surgery centers, imaging centers and specialty hospitals as other parts of the U.S. do, she added.
Hospital industry officials in the Northeast meanwhile, say there are many things driving their costs higher. There are a number of factors driving healthcare spending in New York, said Bill Van Slyke, spokesman for the Healthcare Association of New York State. We certainly have a higher urban concentration, and a higher rate of social diseases such as HIV and AIDS, he said. The population is older and so is the infrastructure in New York than in other parts of the country. Also, We have a much higher proportion of medical education, more resident physicians, he said.
The CMS report, based on data from the CMS National Health Expenditure Accounts, expands on a previous report in examining the drivers in spending differences from 1998 to 2004, the most recent years for which data were available. It appeared exclusively on the Health Affairs Web site, healthaffairs.org.
States with generous Medicaid programs also had higher spending levels, the report said. Massachusetts per-enrollee Medicaid spending, for example, was $9,150 in 2004, and New Yorks per enrollee Medicaid spending was $10,173, among the highest in the nation.
Its not surprising that spending is high in Massachusetts, a state that has universal health insurance and the average benefits are more comprehensive, said Rich Copp, spokesman for the Massachusetts Hospital Association. The report, however, didnt adjust for wage differences, and its well-known that labor costs in Massachusetts are way above the average, he said.
If the CMS had accounted for this, Massachusetts probably would have been more in line with the rest of the country in terms of spending, he added.
Per capita spending on hospitals in what it called the far West region, however, grew much faster during the 1998-2004 period, 6.5% annually, than it did from 1991 to 1998, when it was only 2.2% annually, the report noted. Hospital spending growth for all of the regions increased during these time periods, driven by several factors such as greater use of hospital services and faster growth in hospital wages and professional liability costs, the report stated.