In 2008, Medicare spent $9,100, on average, for each Medicare beneficiary. Multiply that times the 46 million people enrolled in Medicare in 2008 for a total expenditure of $418 billion. Kaiser Health News reported on a study of how much Medicare spends in locations around the country and efforts to determine how much waste there is in the health care program for seniors and disabled individuals.
Medicare spending in Arizona is below the national average, though it depends on how you look at it. The Kaiser Health News article reports that in Mesa, Arizona, Medicare spending was 5 percent below the national average in 2008. But the average Mesa Medicare patient was slightly younger than the national average, and fewer patients had diagnoses that were expensive to treat such as heart failure and diabetes. So, when looked at this way, average Medicare spending in Mesa became $8,370, which put it 12% above the national average ($7,500).
Miami, Florida is the most expensive city for Medicare, with an average cost per Medicare beneficiary of $18,199 in 2008. That was twice the national average cost! Medicare studied patients in Miami to see if doctors there were milking the system by ordering more tests and performing unnecessary operations and procedures. It turns out that patients in Miami are very sick and require more care. When this is taken into account, the adjusted cost per Medicare beneficiary in Miami was $10,145 in 2008, which was 35% above the national average. Miami is the epicenter for Medicare fraud and it looks like there is plenty of waste and/or fraud even when you consider the very bad health of patients there.
Sun City, Arizona came in 4% below the national average in 2008, at $8,764 per Medicare beneficiary. But when Medicare looked at the details of patients in Sun City, it turned out they were not that sickly and their care was a bit out of line for their health conditions. Using a complicated formula, Medicare adjusted the average cost for Sun City to $7,999 per person, and this was 7% above the adjusted national average.
In Tucson, Medicare spent $7,747 on average for each person enrolled in Medicare in 2008. That was 15% below the national average, which is a good thing. But it turns out that, like Sun City and Mesa, our seniors are healthier than those in other parts of the country. So when Medicare adjusted for Tucson’s younger, healthier Medicare beneficiaries, we came in 1% over the national average.
Honolulu is one of the least expensive cities for Medicare as the average cost per beneficiary was just $6,732 in 2008. This was 32% below the national average.
Albuquerque, New Mexico is another low cost city for Medicare, coming in at 26% below the national average.
The key for Medicare is to determine if these lower cost locations simply have healthier seniors, or if hospitals and doctors are operating in more efficient ways, resulting in lower costs to the Medicare program. This is very important because of growing Medicare enrollment (2.8 million baby boomers turning 65 in 2011) and political pressure to cut Medicare benefits.