Study presents new theory for regional health cost differences

A new study released this week casts doubts on the widely held notion that regional disparities in health spending are the result of wasteful practices and overtreatment (Source: “Medicare Spending Variations Mostly Due To Health Differences, Study Concludes,” Kaiser Health News, May 28, 2013).

In the study published in the journal Medical Care Research and Review, researchers affiliated with the Center for Studying Health System Change criticize the work of the Dartmouth Institute for Health Policy & Clinical Practice, whose three decades of research has popularized the theory that the unexplained regional differences in spending are due to the aggressiveness of some physicians to do more, in large part because it enriches them.

Instead, the Center for Studying Health System Change researchers contend that regional differences are predominantly the result of regional differences in health status.

“People really are sicker in some parts of the country,” said Dr. Patrick Romano, one of the authors.

The debate over the cause of regional cost differences could have a major impact on health policy. Much of the policy in the Affordable Care Act, such as the promotion of Accountable Care Organizations, is predicated on the Dartmouth research on cost disparities.

Researchers from Dartmouth have strongly disputed the new study, calling the research “severely flawed” in an online rebuttal.