disparities in healthcare expenditure

Tyler Cowen at MR points to an interview with a medical doctor who disputes President Obama’s claim that there is considerable waste in the US medical care system, elimination of which can help pay for health care reform.

It should not be surprising that growth in health care spending is greatest in areas of the country with greater wealth. But the oddity is that those same areas tend to have a lot of poverty – think of dense urban centers – affluence and poverty side-by-side. Wealth creates the capacity for health care. But it is low-income individuals who use the most health care resources. Wealth is a source of health care creation; poverty is a source of health care consumption. ….

More spending at the high end [of income distribution] improves outcomes, not simply for a specific condition but across the board, because the care consists of a broader spectrum of beneficial services. More yields more. But among the low-income patients, outcomes are poor despite the added spending. In fact, the added spending is because of poor outcomes – more readmissions, more care for disease that’s out of control.

Interview with Richard  ‘Buz’ Cooper, MD, Prophet of Physician Shortage and Challenger of Policymaker Assumptions“, Medinnovationblog, 24 January 2009.

The doctor is a Professor of Medicine at the University of Pennsylvania who writes frequently on issues related to healthcare reform. His assertion that low-income people consume more health care than the wealthy is simply false. It is false even in Canada, where provincial governments provide a similar standard of health care to all residents, without demanding co-payments. It is emphatically false for the US, where many of the poor are uninsured. A 2006 comparative study of the two countries found “US respondents with incomes in the lowest quintile were less likely to have a regular medical doctor or to have contacted any medical doctor in the past 12 months than were US respondents in the highest quintile” and discovered health disparities to be more pronounced in the US than in Canada.

Dr Cooper concedes that medical outcomes in Montana, for example, are superior to those in New York City, despite lower per capita expenditure, but argues that this merely reflects the large proportion of poor — thus unhealthy — people living in New York. “And so, as the sun sets on America, we can all sleep comfortably, knowing that if only Manhattan could be like Montana, all would be well for health care – and we’d save 30% in the process ….”  He ignores studies that control for demographic differences, and makes no mention of Dr Atul Gawande’s finding of huge differences in medical spending in two Texas cities that have populations of similar size and composition, with outcomes that are actually worse in the city with highest expenditure.

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