More Money, Better Health?

http://www.sciencedaily.com/releases/2011/05/110527162502.htm

ScienceDaily (May 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.

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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

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"Over this three-year period-controlling for people's health when they first come into the survey and new diagnoses they may have had over the course of the three years-what was their health like at the end of the observation period? And did that vary with how much medical care they received as individuals?" Hadley asks.

The statistical analysis indicates that the individuals' health did vary with their medical care spending. Over a three-year span, for a 10 percent increase in medical spending, there was 1.9 percent increase in the patient's health score, called the Health and Activity Limitations Index and a 1.5 percent greater survival probability.

The researchers classify this finding as a "modest effect" but stress that "the key thing is that we did find a positive relationship as opposed to other studies which have suggested that there's no relationship between how much care a person receives and what their health outcomes are.

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