A Healthy Blog

Massachusetts health care — wonky, with a healthy dose of reality

MA Is Number One in Health Spending, Again

MA Is Number One in Health Spending, Again

September 20, 2007

It's not news that MA has the highest per capita health spending in the nation, but the new Health Affairs study offers some helpful insights in understanding the nature of our dubious distinction.

The numbers: 2004 -- $6683 vs. $5283 for the nation. Average growth 1998-2004, 6.2% in MA vs. 6.3% in US. In 1998, MA was 127% of the US rate; in 2004, we were 126%. Some interesting comments:

"In 2004, the ten states with the highest per capita personal health care spending were Massachusetts, Maine, New York, Alaska, Connecticut, Delaware, Rhode Island, Vermont, West Virginia, and Pennsylvania. These ten states consumed an average of $6,345 per person in 2004--nearly 20 percent higher than the U.S. average of $5,283. ...

"...within the top ten states, Massachusetts, New York, Connecticut, and Delaware ranked among the highest in the nation in per capita personal income. In addition, Massachusetts, New York, Connecticut, Rhode Island, Vermont, and Pennsylvania ranked among the highest in concentration of physicians to population. Also, the uninsured share of the population was among the lowest in the nation for some of the top ten per capita health spending states. This suggests that residents in these states may receive more services through more comprehensive employer-based health insurance benefit packages, or that the states are in a stronger financial position to provide expanded benefits through Medicaid or other state-initiated programs. ...

"Massachusetts, for example, had the highest per capita health care spending in 2004 ($6,683)--nearly 27 percent above the U.S. average. It ranked near the top for per capita hospital, nursing home, and home health spending as well as for total per enrollee Medicare and Medicaid spending. Hospital spending in Massachusetts may be driven by higher-than-average use of services, such as diagnostic treatments and more intensive services commonly used in teaching hospitals. Furthermore, Massachusetts offers an expansive Medicaid program that may contribute to its higher-than-average Medicaid and overall health spending. ..."

John Holahan from the Urban Institute offers comments on the link between higher per capita spending and state health reform efforts:

"Ironically, the recent interest in state health reform is likely to make current inequities worse. Massachusetts has enacted a plan to achieve (close to) universal coverage. Other relatively progressive states including New York, Connecticut, Vermont, Pennsylvania, and Illinois have enacted or are seriously considering major proposals to extend coverage to all. In American politics today, it is likely that only these more progressive states can achieve the political consensus necessary to substantially extend coverage."

So we spend a lot, some due to higher levels of coverage, some due to higher per capita income, some due to higher provider spending (hospitals, nursing homes, home health), and some due to higher utilization by non-state residents. Let's put a nice spin on it -- we have lots of opportunity for improvement.