NCPA - National Center for Policy Analysis


February 27, 2009

Medicare spending continues to vary widely across the country, with some cities like Miami and Dallas experiencing much faster growth in costs than places like San Francisco and Pittsburgh, according to an analysis by Dartmouth College researchers. 

Other findings:

  • The regional differences in the growth of Medicare spending suggest doctors are helping to drive up costs when they more frequently order tests or admit patients to the hospitals.
  • In areas where there are plenty of hospital beds and sophisticated imaging equipment available, doctors generally spend more on their patients.

While the specific dynamics of the local markets vary, the current payment method fuels spending by encouraging hospitals and doctors to try to expand their services, and as long as Medicare pays for volume and intensity, that's what we are going to continue to get, say the researchers.

Take the example of Miami, where many doctors schedule monthly appointments for heart disease patients, yet, they are experiencing the fastest rise in health care costs:

  • Medicare spending there rose 5 percent a year from 1992 to 2006, compared with 2.4 percent in San Francisco.
  • Medicare spent about $16,000 per enrollee in Miami in 2006, compared with about half as much in San Francisco.
  • If the federal government could find a way to make sure the national health care bill increased no more quickly than that of a city like San Francisco, it could eventually save tens of billions of dollars.

Source: Reed Abelson, "Medicare Costs Rise Unevenly Across U.S." New York Times, February 26, 2009; based upon: Elliott Fisher et al., "Slowing the Growth of Health Care Costs -- Lessons from Regional Variation," New England Journal of Medicine, Vol. 360, No. 9, February 2009.

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