HOUSTON (Dec. 7, 2010) Private insurers appear to be more effective in controlling health care spending differences between two Texas cities than Medicare, according to researchers from The University of Texas Health Science Center at Houston (UTHealth) School of Public Health. Researchers found that sharp disparities in per-capita Medicare healthcare spending between McAllen and El Paso were significantly diminished when private insurance paid for health care costs in the under-65 population.
"For a number of reasons, insurers generally are reluctant to intrude on medical service decision-making," said study lead author, Luisa Franzini, Ph.D., associate professor at the UTHealth School of Public Health. "But 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 Franzini.
Co-authors of the study were Osama Mikhail, Ph.D., director of the UTHealth Fleming Center for Healthcare Management and Jonathan Skinner of Dartmouth College. The study is published in the December issue of Health Affairs.
Private insurance companies have utilization management mechanisms in place which require preauthorization of elective inpatient admissions and they encourage management of chronic conditions through a variety of condition-specific management programs, according to Franzini. "Catastrophic events or high claims could send a red flag in the system which activates a case management process of reviewing alternative treatment plans," said Franzini.
According to the authors, the study cannot explain definitively why variations in health care spending drop under private coverage but suggest utilization management mechanisms.
The study is a follow-up to a 2009 New Yorker article by Atul Gawande. The article used data from the Dartmouth Atlas of Health Care on variations in Medicare spending to show tha
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University of Texas Health Science Center at Houston