Health Cost Variations Less Common in Private Plans Than in Medicare

Health care spending variations are not as dramatic among private insurance plans as among Medicare fee-for-service plans, a recent study published in the journal Health Affairs suggests, CQ HealthBeat reports (Adams, CQ HealthBeat, 12/7).

The results are being compared with a 2009 New Yorker article by Atul Gawande that found Medicare spending in McAllen, Texas, was higher than in almost any other part of the country (Rau, "Shots," NPR, 12/7).

Gawande Article

Gawande's article said that Medicare spent 86% more on patients enrolled in fee-for-service plans in McAllen than in El Paso, Texas (CQ HealthBeat, 12/7).

Both the White House and Congress used the article during the health reform debate as an example of drastic spending variations in the U.S. health system ("Shots," NPR, 12/7).

Health Affairs Article

However, the new Health Affairs study examined 2008 claims data from Blue Cross Blue Shield of Texas and found spending for people younger than age 65 enrolled in private health plans was 7% lower in McAllen than in El Paso (CQ HealthBeat, 12/7).

According to the study, BCBS spent $2,266 on the average enrollee living in McAllen, compared with $2,428 on the average El Paso enrollee.

The authors said private insurers such as BCBS might be better than Medicare at discouraging excessive use of medical services.

Luisa Franzini, the study's lead author, said, "What we're saying is not in contrast to what Gawande found," adding, "But in this case, where there is pressure for over-utilization, private insurance companies in general may be better able to control it than Medicare."

Gawande responded to the new study on his New Yorker blog. He said the discrepancy could be explained by deficiencies in the private insurance data used in his 2009 article.

He said, "The samples were small, with much less detail than Medicare provides, and I wasn't permitted to know anything about the employers included" ("Shots," NPR, 12/7).