In the middle of 2009, a New Yorker article by Atul Gawande told the puzzling tale of McAllen, Texas, the most expensive city for Medicare recipients to receive medical care in the United States. But what made McAllen puzzling was not that medical costs were high, but that they were almost twice as high as El Paso, McAllen's demographic twin 750 miles to the northwest. But for all that extra cash, outcomes were the same. Thousands of dollars were just disappearing into the health care system.
The Gawande article offered a tantalizing prospect for policymakers: figure out how to make the country's high-cost McAllens look more like El Pasos and save billions, ensure the solvency of Medicare and reduce the economic drag of health care spending, which currently eats up 16 percent of the GDP of the United States. The article was required reading in the White House, and "McAllen," in health policy and health economics circles, soon become synonymous with "waste."
Pinning down the problems in McAllen proved difficult for Gawande. The high spending wasn't linked to poor health (El Paso had a similarly sick population of seniors). It wasn't the fault of trial lawyers (doctors in both cities were protected by Texas' tort reform law that diminished the threat of malpractice). And it wasn't because the extra money was buying better health. Gawande settled on a "culture of money" as the explanation: McAllen simply had a high proportion of entrepreneurial doctors who had become exceptionally good at squeezing money from the system.
Still, efforts continued to tease out the McAllen vs. El Paso dichotomy, and the most intriguing analysis was published earlier this month in the journal Health Affairs. In the article, researchers from the University of Texas looked both at the costs associated with the Medicare population in the two cities as well as per-patient costs incurred by a private insurer, Blue Cross and Blue Shield of Texas. The results, in aggregate, appeared to vindicate McAllen: while the findings replicated Gawande's findings with regard to Medicare, across all Blue Cross/Blue Shield members, costs were actually slightly lower in McAllen than El Paso.
If there was a "culture of money," it wasn't being enabled by Blue Cross/Blue Shield, went the argument. The authors suggested that the more-watchful eye of Blue Cross/Blue Shield was keeping costs in check: things like requiring pre-authorization and using disease management programs. "... the fact that utilization management mechanisms exist for private insurers may prompt some physicians, who might otherwise overuse certain services, to exercise more restraint," said Luisa Franzini, Ph.D., the lead researcher and an associate professor at the University of Texas Health Science Center at Houston School of Public Health, in a press release.
That's was good news: the hint that, just maybe, if Medicare worked a little more like private insurers, some overuse could be squeezed out of the system. Even Gawande expressed cautious "hope," writing on his blog: "Nonetheless, if Blue Cross is succeeding, that means health costs can be malleable -- even in one of the most expensive cities for health care. Rationing, in other words, is not our only option."
But there is also reason to doubt that insurance companies can teach Medicare how to do away with overspending. A closer look at the numbers eroded the broad conclusions in the Health Affairs piece: while younger patients in McAllen were clearly generating fewer health costs, those aged 50 to 64 -- a group closer to the 65+ Medicare demographic -- were far more costly in McAllen, using inpatient services at nearly twice the rate of their peers in El Paso and generating more than twice the inpatient costs.
Overall, for those older than 50, per-patient care ran 23 percent higher in McAllen than in El Paso. On the one hand, that's a smaller gap than was seen in the older, sicker Medicare patients. On the other hand, the results show that, despite Blue Cross/Blue Shield's best efforts, medicine remains expensive -- really expensive -- in McAllen.
So the puzzle of McAllen and its "culture of money" remains. More zealous policing of costs only goes so far. That doesn't mean that there won't be ways to bend the cost curve in McAllen (and other high-cost locations), only that the solutions to the problem will no doubt be a lot more complex than could have been envisioned before Gawande set foot in southern Texas.
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