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More money, better health?
Date:5/27/2011

A new study from George Mason University and the Urban Institute reveals that greater spending on medical services means better overall health for Medicare participants. Health Administration and Policy Professor Jack Hadley and his co-authors, Urban Institute researchers Timothy Waidmann, Stephen Zuckerman, and Robert Berenson, analyzed data from more than 17,000 Medicare beneficiaries to draw this conclusion.

Previous reports showed that Medicare spending varies greatly by geographic area, but with little to show for it-the health outcomes for people who live in expensive geographic areas are not necessarily better than those who live in less expensive geographic areas. As a result, policymakers have considered limiting Medicare payments in high-cost areas.

But, as described in their recent study, "Medical Spending and the Health of the Elderly," the research team found that spending more on Medicare medical expenses actually resulted in greater survival and a better overall health score, using an index that measures perceived health and activity limitations.

"The motivation for the study was a large body of research that's been done over the past ten years that typically has found that there is little or no relationship between how much Medicare spends and the health outcomes of elderly people," Hadley says.

But these studies looked at large swathes of populations, typically by geographic location, and used averages to draw their conclusions. "The implication was that higher spending was not contributing to better health," Hadley says.

He explains, "While that finding is very persuasive, it doesn't look at individuals and the amount of medical care that they each receive." So in this study, the research team used data from the Medicare Current Beneficiary Survey, which collects extensive information from Medicare participants over a three-year span, to determine whether a relationship existed between medical spend
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Contact: Leah K. Fogarty
lfogart1@gmu.edu
703-993-8781
George Mason University
Source:Eurekalert

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