Regional Variation

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Economist Rekindles Debate over Geographic Differences in Health Spending

By Jordan Rau, Kaiser Health News

An economist at the Federal Reserve has restoked the debate over the causes of regional differences in Medicare spending, and her analysis disputes some of the thinking behind a number of policy changes in the 2010 health overhaul.

The Obama administration and many prominent economists believe that as much as a third of the $2.7 trillion spent on health care may be due to wasteful practices of physicians and hospitals that could be eliminated without hurting patients. This is based on decades of research, principally by the Dartmouth Institute for Health Policy & Clinical Practice in New Hampshire, showing that Medicare spending in some regions of the country is significantly higher than others.

This geographic variation in spending, which the government has also examined, was a motivating force behind a number of government initiatives including changes in Medicare payment to reward hospitals and doctors who provide good care efficiently. Continue reading