Testimony of U.S. Representative Allyson Schwartz Institutes of Medicine Committee on Geographic Variation in Health Spending and Promotion of High-Value Care November 9, 2010

Medicare Spending per Beneficiary by Hospital Referral Region

Medicare Spending per Beneficiary by State Adjustments: Rates are adjusted for age, sex and race using the indirect method, using the U.S. Medicare population as the standard. Gender-specific rates are age and race adjusted; race-specific rates are age and sex adjusted. Source: % % %

Medicare Spending per Beneficiary, by State Adjusted for Wages, Health Status, and DGME/IME/DSH

Geographic Variation in Medicare Drug Spending Yuting Zhang, Ph.D., Katherine Baicker, Ph.D., and Joseph P. Newhouse, Ph.D. Medicare Spending per Beneficiary, by Hospital-Referral Region “Values differ from those in the Dartmouth Atlas primarily because we adjusted for a longer list of patient health characteristics but also because we included only Medicare beneficiaries with stand- alone Part D plans and included out-of-pocket spending along with Medicare reimbursement.”

Total Health Care Expenditures per Capita Source:

Average Annual Percent Growth in Medicare Spending per Enrollee by State of Residence

8 Medicare spending shows substantial geographic variation with California having higher spending than U.S. average & higher than Minnesota, with LA County higher than California Medicare spending for hospitalizations in the last 2 years of life for patients with one of nine chronic conditions ( ) LA Co Cal Minn U.S. Medicare spending per capita by HRR, LA Co Cal Minn U.S.

Does the oversupply of resources cause high Medicare spending? California Minnesota Hospital beds/1000 (2007) Admissions/1000 In-pt. days/1000 RNs/100,000 (2008) MDs/1000 PCPs/ , Evidence does not support such a theory 9

Lowest incomes have highest health care utilization & cost Health Affairs. 12 :163, 93. Percent of households with income under $15,000

11 Core L.A. Minnesota Population Per capita income % Black/Hispanic % < 100% poverty % Uninsured 2,265,900 $11,500 80% 56% 24% 5,165,000 $37,373 9% 11.6% 8.8% Poverty concentrated in LA County in central core

Medicare hospital days/1,000 Medicare enrollees(2007) LA Core LA California Minnesota U.S. without core without LA core Almost entire difference in Medicare spending between LA & Minnesota is result of high spending in poverty core Zip Code Databook California OSHPD