Insights

Beyond the Dartmouth Atlas – Regional Variation in Private Health Care Spending

By Gregory Curfman, MD

The Dartmouth Atlas of Health Care, compiled over the past several decades, is a unique data source on geographic variations in health care spending and practices. Such regional variations may be quite marked and present illuminating trends in practice patterns. Conclusions drawn from the Dartmouth Atlas, however, are limited by the fact that the Atlas contains only data derived from Medicare fee-for-service, not information from private insurance or Medicaid managed care programs. Until recently, we didn’t know how big that limitation really was.

Three large insurers, Aetna, Humana, and UnitedHealthcare, voluntarily contributed their complete cost data to the nonprofit Health Care Cost Institute (HCCI). Zack Cooper and colleagues analyzed the data contributed by these companies. They found that there was as much, if not more, regional variation in private health care spending as in Medicare fee-for- service spending. Surprisingly, however, there was no correlation in spending trends between the two. While variation in Medicare spending is due to regional differences in utilization, variation in private spending is due to differences in hospital prices for services, which are in turn driven by hospital market power.

In order to better understand total health care spending within a geographic region, it is necessary to have data on both government and private insurance spending, which is typically contained within state-based all-payer claims databases (APCDs). But the legal viability of APCDs is now under scrutiny at the Supreme Court in an important case, Gobeille v. Liberty Mutual Insurance Company, Inc. The legal argument is based on the principle of preemption, which states that federal law takes precedence over state law. Since federal law already requires reporting of some data related to health insurance, Liberty Mutual argues that it should not also be required to report cost data to the state. Should Liberty Mutual prevail in the case, a majority of APCDs in the U.S. may be gutted, essentially eliminating these valuable data sources.

In this article we call upon all private insurers to join Aetna, Humana, and UnitedHealthcare and voluntarily contribute their cost data to HCCI. This does not have to be done out of altruistic intentions only, as these insurers would also stand to gain from the analyses the ‘all-payer’ data set would enable. In this way the outcome in Gobeille will be rendered moot, and a rich source of valuable health care cost data will be made available to the public. At a time when our nation is struggling with rising health care costs, we should expect nothing less from the insurance industry.

Gregory Curfman is a Editor of Harvard Health Publications, Harvard Medical School and is on the faculty of Harvard Medical School and the affiliated faculty of Harvard Law School

Photo by reednovagallery, used under CC BY / No alterations from the original

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