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Health Care Spending in Minnesota

By November 29, 2018Commentary

Some states are emerging as a good source of data on health spending and health spending issues.  One is my home state of Minnesota.  A group called Minnesota Community Measurement has access to multi-payer data for the state and recently issued another study of health spending in the state.  (MCM Report)   This report focuses on people with private insurance and on utilization and price variation.  Overall the cost of care per person with private insurance increased 2% in 2017, or $563 per person per month, a substantial drop from the 5.6% rise in 2016.  Professional services at 3.3% and inpatient care at 3.2% had the fastest growth rates and pharmacy at 2% and outpatient hospital, with a 1% decline,  the slowest.  The lower increase in the pharmacy and outpatient hospital categories is particularly welcome, as they have had much higher growth rates in past years.  There is very substantial variation across medical groups in risk-adjusted per person spending, ranging from $398 to $1093 per month.  The biggest factor in this variation is price differences, not resource use, or utilization. But there is about a 95% rate of variation in both resource use and price.  Using a statewide average as the norm, for example there is risk-adjusted variation in hospital admission rates from about 48% below the norm to 90% above it.  Prescriptions filled varies from 29% below the norm to 56% above it. The widest variation is in ER use and it is the most correlated with total cost.  Looking at some common procedures, the wide variation in prices in evident.  For an eye exam, the range is $82 to $217 and the median is about 140% of what Medicare would pay.  Certainly suggests there is some subsidization of government programs by private health plans going on.  Colonoscopy prices range from $289 to $1853 with the median being 162% of Medicare payments.  Imaging procedures have very wide variation and the median price is 200% or more of the comparable Medicare price.  Somewhat surprisingly, office visits also have typical median private insurance reimbursements that are over 200% of the same fee for Medicare.  Overall, the comparable private and Medicare reimbursement has demonstrated a widening gap over recent years.  Hard to understand either how there can be so much variation in prices charged, or resource use for the same condition, and hard to justify having private insurers, and the people covered by them, paying so much more for the same service.

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