Truth: McAllen Health Care Costs Among Nation's 10 Lowest

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Truth: McAllen Health Care Costs Among Nation's 10 Lowest

How ironic! After all the hubbub a year ago about how high health care costs were here in McAllen, NOW, after researching the situation, look what they're saying!


Posted at 10:00 AM ET, 08/10/2011

McAllen, Texas: Not so bad after all?

Just about two years ago, the small town of McAllen, Texas became synonymous with a lot of what’s wrong with American health care. As Atul Gawande reported in the New Yorker, Medicare spent $15,000 per enrollee in McAllen, just about double the national average. President Obama derided McAllen doctors for ordering “treatments they don’t really need.”

Turns out, McAllen, Texas might not be so bad. In fact, when you measure private insurance spending in the state, it looks really, really good.

An interesting  study out Wednesday from Thompson Reuters looks at geographic variation in commercial insurance markets.

It ranks McAllen as one of the 10 cities with the lowest health spending, about $2,950 per individual or 71.9 percent of the national average.

This builds on a Health Affairs study in December that estimated Blue Cross Blue Shield spending in McAllen to be near the insurer’s national average.

What’s different? Gawande’s article relied on Medicare spending, while this new study looks at how much private insurers are spending. The Thompson Reuters study also finds that McAllen has high rates of spending when it comes to seniors, about 129 percent of the national average. But when it comes to spending on the under-65 population, the city is an outlier for very low health care costs.

“The world is a more complicated place than just a number from Medicare,” says William D. Marder, lead author on the Thompson Reuters study. “We understand some places have high costs, some places have low costs, but not necessarily why.”

Marder is hesitant to field a guess as to why spending trends look so different in commercial and Medicare markets. “Spending is a result of two different things: variation in price and variation in utilization,” he says. “How much is overuse, or underuse, we don’t have any compelling answers or good hypotheses.”

Gawande, who has previously written on some of the possible differences between Medicare and private health spending, also sees a few factors that could be at play here.

“It could be because the patients have quite different health care needs. Or it could be because the private insurers have imposed more effective controls in those communities,” he wrote in an e-mail. “ The vast majority of health spending in McAllen in particular is for the publicly insured, but findings about the commercially insured give us insight into the whole. This report--with its findings about the relatively lower costs for children and young adults and relatively higher for the elderly--suggests both the factors I mention might be in play.”

The big takeaway: geographic variation in health spending is complicated. What’s true about Medicare spending in a given city rarely correlates with what’s happening in the private market. That makes the task of reducing geographic disparities in health spending doubly as hard.

The smaller takeaway: maybe let’s cut McAllen a little slack.



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