Study shows wide variation in utilization and total cost of medical care
February 27, 2025
Health care spending per capita across U.S. counties
Source: Dieleman, et al JAMA Health Forum February 14, 2025
The Institute for Health Metrics Evaluation (University of Washington) published a report in JAMA and JAMA Health Forum last week demonstrating high variation geographically and across a variety of categories of patients from 2010 to 2019.
Geographically, the researchers showed that net medical spending ranged by county from $2,700 to $17,000 per person per year. Health policy researchers often use counties to evaluate variation, although counties are an imperfect unit of comparison as they range in population. For instance, Loving County, TX (population 64), is too small to allow for meaningful conclusions. Los Angeles County, CA (population 9.7 million) is so heterogeneous that variation will be missed.
For private payers, this analysis shows that almost two-thirds of the difference in cost was due to utilization differences. People who were insured, had higher income, and higher education had higher utilization rates. Importantly, the authors noted that, “Critically, this research does not and cannot identify the right amount of utilization.” Thus, it is difficult to know if the higher utilization (and therefore cost) counties are over-utilizing services, or if the lower utilization (and lower cost) areas are under-utilizing services from this analysis.
Source: Dieleman, et al JAMA Health Forum February 14, 2025
Implications for employers:
● While these researchers have shown that variation within the U.S. is largely due to utilization rates, the U.S. health care system is much more expensive than systems in other wealthy countries largely due to high U.S. unit prices.
● There is opportunity to better control medical costs, both by decreasing utilization and by addressing high unit prices.
● Those who are poorer, live in more rural areas, or have lower educational levels are more likely to have low utilization, which could mean that they are missing high value care.
Thanks for reading. You can find previous posts in the Employer Coverage archive
Please subscribe, “like” share this newsletter with friends and colleagues. Thanks!
Tomorrow: Shorts and followups