NCPA - National Center for Policy Analysis

Higher Medicare Spending Doesn't Improve Outcomes

February 18, 2003

Medicare spending varies widely across the United States, but there is little evidence that outcomes are better or patients are more satisfied with their care in areas with higher than average spending.

Two new studies in the Annals of Internal Medicine looked at how much was spent on care in the last six months of Medicare patients' lives. They then looked at the records of nearly a million Medicare patients who suffered hip fractures, colon cancer or heart attacks from 1993 to 1995 to see how the patients fared.

  • The researchers found no significant differences in death rates or patients' levels of functioning regardless of the level of spending.
  • Patients reported different levels of satisfaction on their surveys, but satisfaction appeared to be unrelated to spending.
  • The extra spending went primarily toward more frequent hospitalizations, diagnostic tests and referrals to specialists.
  • If spending across the country could be held to the levels used in the least expensive area, overall Medicare costs would be cut by 30 percent, they estimated.

The serious of the patients' illnesses did not explain the differences in spending. The patients seemed to be roughly as sick everywhere.

Source: John O'Neil, "Patterns: When Money Doesn't Matter," New York Times, February 18, 2003.


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