A guest column published by Kaiser Health News points out an interesting (and largely undiscussed) feature of Congressman Paul Ryan’s hot-button Medicare plan: It ignores differences in Medicare costs between regions, and as a result, it could “expose the egregious amount of money Medicare wastes in many parts of the country.” #

Under Ryan’s proposal, seniors would receive a flat-rate voucher that would help them buy private insurance — regardless of where they live. As this map shows, Medicare expenses vary widely in different parts of the country, and even between neighboring cities. #

In Florida, for example, an insurance voucher worth $8,000 would have covered the average patient in the Tallahassee region, where Medicare patients spent an average of $7,579 in 2007, the most recent year for which data are available. That same amount would fall far short in Miami, where the average patient spent more than $17,000 — some of the highest expenditures in the country. #

Shannon Brownlee and Eric Schultz of the New America Foundation argue in their column that these variations have little to do with the number of care patients receive, or the quality of that care: #

Under the current system, beneficiaries are largely shielded from both regional differences in spending and from the way their health care is delivered. Medicare picks up the tab for 80 percent of the cost of care, and most patients don’t know the difference between necessary and unnecessary care. Under the Ryan plan, those regional differences might come into focus when seniors are forced to buy their insurance on the private market. #

There’s no guarantee that private insurers would base their prices on local spending, but if they did, $8,000 a year would buy patients in Minneapolis a gold-plated health plan, with all sorts of fringe benefits — maybe a new pair of glasses every year, or memberships in health clubs. In Miami and McAllen, $8,000 would hardly be enough for a high-deductible plan. #

A few different things could happen: Either patients in places like Miami would suffer, or they would lobby Congress for money, or, if things work out well, insurers could succeed in reigning in costs: #

Much of the difference in spending [.pdf] can be attributed to disorganization among providers in high-spending regions, and their habit of delivering exceptionally aggressive care at the end of life. These regions generally have a high number of specialists per capita, and a high ratio of specialists to primary care providers. Greed is also part of the problem. The amount of fraud makes south Florida look a little like the intersection between medicine and the “Pirates of the Caribbean.” #

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