Two-Fold Variation in Hospital Care among Privately Insured

Researchers at Dartmouth Medical School have documented that Medicare patients receive dramatically different amounts of medicine in different parts of the country. Doctors in some areas just seem to do lots more stuff to Medicare patients than doctors in other areas, and that additional stuff doesn’t seem to make patients any healthier or happier. But does the same hold for patients under age 65?

According to an article just published by Health Affairs, the answer appears to be yes. The authors – Laurence C. Baker of Stanford University, and Elliott S. Fisher and John E. Wennberg of Dartmouth Medical School – write:

We studied variations across California hospitals in hospital resource use for chronically ill patients covered by Medicare health maintenance organizations (HMOs) and private insurers and found substantial variation in all of the coverage groups studied …

For example, for privately insured PPO or FFS patients, the number of hospital stays in the last two years of life averaged 2.4 at the least-resource-intensive hospital, compared to more than double that rate–a little more than 5.0 stays–at the highest hospital. The average number of days per hospital stay for these patients ranged from a low of 4.5 to a high of 12.5. Sizable differences between the hospitals with the highest and lowest rates of resource use could also be found in the other groups. In most cases, the magnitude of the variation across hospitals was as large for Medicare HMO and privately insured patients as it was for Medicare FFS patients.

The authors did not explicitly consider whether the high-use hospitals delivered better outcomes, though they did argue (consistent with previous studies) that this was unlikely:

For example, in the private PPO population we studied, patients cared for in hospitals with the highest resource-use levels tended to die at younger ages–opposite the view that more resource use might somehow prolong life.

Baker, Fisher, and Wennberg conclude, “Previous estimates of savings if the most resource-intensive hospitals more closely resembled less resource-intensive hospitals, based on just Medicare FFS spending, could underestimate possible savings when other payers are taken into account.”

Supporters of Medicare-for-All claim Medicare is more efficient than private health insurance. On the contrary, it may be that private health insurance is just as inefficient as Medicare.