It wasn’t long ago that the Centers for Medicare & Medicaid Services was rather tight-fisted with data like that found in this new report, in particular numbers related to annual Medicare spending per enrollee.  A few years back, when IHA was fighting to make the case that Medicare exploited low-spending, high-quality states like Iowa to subsidize states on the other end of the value spectrum, this information was as hard to find as a black cat in a coal crib.

Things have changed. Oh, Iowa is still low on Medicare per-enrollee spending, though we’ve moved from the bottom five to the bottom 10.  But at least the data is there – and there’s plenty of it to mull over as the report covers two decades of health care spending by Medicare, Medicaid and the population as a whole.  And though there are a lot of numbers, there are not a lot of easy answers about why the numbers are so different from one place to the next.

Here’s what the numbers tell us.  First, states with relatively low per-capita spending tend to have younger populations that don’t “use” a lot of health care, like Utah (median age: 28.8; annual per-capita health care spending: $5,031).  They also have another group that tends to use less care – the uninsured – like Texas (percent of population uninsured: 26 percent; annual per-capita health care spending: $5,934).

Iowa sits in the middle (28^th) for per-capita health care spending at $6,921.  This may seem surprisingly high, but it makes sense because Iowa is well insured (10 percent uninsured – only three states do better) and has a relatively large population of senior citizens (15 percent of Iowans are 65 years or older, the fifth highest rate in the nation).  Massachusetts provides the perfect storm for pushing up health care costs: nearly everyone is insured (4.4 percent uninsured) and the median age is high (39).  But most important is Massachusetts’ unrivaled density of medical providers; the state has one physician for every 189 people; in Iowa, there is one physician for every 479 people.  No wonder Massachusetts’ per capita health care spending is $9,277 (the highest of all states and 30 percent more than Iowa).

Older people are more expensive to keep healthy than younger ones, which is why in nearly every state (Alaska is the exception) more money is spent on each Medicare recipient than on the typical resident.  In Iowa, it’s about 22 percent more; in 18 states, it’s at least 50 percent more.  Some of that difference can be explained by a relatively young total population that keeps per capita costs down in some states.  However, while there are a lot of uninsured in Texas and the median age is 33 (it’s 38 in Iowa), that doesn’t completely explain why a Medicare patient costs nearly twice as much as a plain ole Texan, on average.  It certainly doesn’t make sense in Florida, where the median age is 40 but a Medicare patient costs 66 percent more than everybody else.

What about Medicaid?  Well, Medicaid doesn’t serve the same populations as Medicare – not exactly, anyway.  Most significantly, many Medicaid recipients are children or young mothers, so you’d expect Medicaid costs per enrollee to be quite a bit less than Medicare and about the same as everybody else (or somewhat higher because many Medicaid recipients are dealing with chronic health problems).  In Iowa, that’s exactly the case – the cost per Medicaid enrollee is 99.5 percent of the cost of a typical Iowan.

However, the real cost of taking care of a Medicaid patient is significantly higher – Iowa hospitals and physicians lose millions of dollars a year because of Medicaid underpayment.  But it could be worse.  California, which spends nearly $11,000 on each Medicare patient each year (ninth highest in the nation), spends only $4,569 on each Medicaid patient (the least in the nation).

Does that mean Iowa is spending too much on Medicaid?  Only if you feel ok about scores of physicians refusing to be part of the program, effectively making millions of Medicaid patients uninsured.  That is precisely what has happened in California, which is more than happy to take advantage of low-cost states like Iowa to pump up its Medicare spending, while strangling providers with ridiculously low Medicaid payments and thereby cutting off health care to millions of the state’s poorest and most vulnerable citizens.

“Wide variation” comes up a lot when discussing numbers like these and how much is spent on seemingly the same patient groups in different parts of the country.  As this brief discussion shows, there are many factors to consider.  Still, while the actual cost of providing health care may be more in Manhattan than Marengo, it doesn’t completely explain why a New York Medicare patient costs 31 percent more and a Medicaid patient costs 37 percent more than the same patients in Iowa.

It is complicated, but it starts with providing value and making value a strategic priority in every Iowa hospital.  It’s about providing quality care, not just quantity care.  And it’s about putting patients first.