Georgia Ranked 48th in Per Capita Personal Health Care Spending

Mike Klein, GPPF Forum Editor

Georgia was ranked 48th — third from the bottom nationally – beating out just Utah and Arizona – in a federal analysis of personal health care spending per capita, according to the Centers for Medicare and Medicaid Services (CMMS) at the U.S. Department of Health & Human Services.   The report analyzed all spending, not just government budget expenses.

Georgia personal health care spending at $5,467 per capita in 2009 was well below the $6,815 national average.  Ten-of-twelve southern states were below the national average.  Alabama ($6,272) joined Georgia in the bottom ten states as did two of the most populous states — Texas ($5,924) and California ($6,238).  Most New England states were above average.

Personal health care spending annual growth rates have declined, measured at 6.4 percent during the 1998 to 2004 period and 4.7 percent during the 2005 to 2009 period.  CMMS said annual growth rate is not the only measure of health care cost impact on the overall economy.

“Despite the slower overall spending growth during the recession, health care consumed an incrementally larger share of the nation’s resources at a historic pace,” CMMS said.  Personal health care spending reached 14.8 percent of national GDP in 2009.  Between 2007 and 2009 every region’s health care spending share grew faster than during the 2001 recession.

The Southeast took a hard hit.  “In the most recent recession, the Southeast and Southwest regions experienced the largest increase in the share of state GDP accounted for by personal health care spending. These two regions have the lowest per capita income and experienced some of the largest declines in per capita state GDP of any region over this period.”

CMMS defined personal health care spending as “the total amount spent to treat individuals with specific medical conditions, but excludes expenditures resulting from government administration, net costs of health insurance, government public health activity, non-commercial research, and investment in structures and equipment.”  Aspirin counts.  Bricks and bureaucrats do not count.

The Centers for Medicare and Medicaid Services said states near the bottom generally have high numbers of uninsured and low per capita incomes.  The analysis noted, “Income appears to have an important and positive relationship with health spending.”  Massachusetts reported the highest personal health care spending per capita — $9,278, well above the $6,815 national average – and it also has one of the highest income levels per capita.

The Kaiser Family Foundation State Health Facts project says one-in-five Georgians – more than 1.8 million – have no health insurance.  Georgia income per capita is about 15 percent below the national average.  Georgia has high official unemployment– 9.9 percent vs. 9.0 percent nationally – which matters because employers still provide most health insurance.

Poverty is also associated with low personal health care spending and the report described a link between “larger shares of Hispanic residents, who are more likely to be uninsured compared to other Americans,” according to the Centers for Disease Control.

States including Georgia are on edge about their health care policies and investments as they await next year’s U.S. Supreme Court opinion on the validity of 2010 federal health care reform, the Patient Protection and Affordable Care Act, sometimes known as ObamaCare.

Thursday the Georgia Health Insurance Exchange Advisory Committee is expected to report its findings to Governor Nathan Deal.  Federal health care reform requires that states must have an exchange in place by 2014.  States that do not start an exchange will be forced to swallow a federally run exchange.  Georgia accepted a $1 million planning grant but it also is among 26 states that sued the federal government to overturn the health care reform law.

Back to the CMMS report: Georgia ranked 49th in Medicaid personal health care spending.  The national average was $6,826 per enrollee; Georgia reported $4,835 per enrollee, down from five years earlier when the state average was $5,532.  Medicare personal health care spending per capita averaged $10,365 nationally two years ago; Georgia reported $9,836 per capita.

Annual spending growth in physician and clinical services in the Southeast grew by 7 percent between 1998 and 2004 when the region led the nation but slowed to 3.2 percent from 2004 to 2009.  That was the slowest regional growth rate and one full percentage point below the national average.

The average annual per capita growth for prescription drugs was down significantly during the 1998 to 2004 and 2005 to 2009 reporting periods, averaging 12.5 percent and 4.6 percent.  The decline was linked in part to the recession and the increased use of generic drugs.  Medicare Part D implementation in 2006 increased prescription drug spending by seniors.

The report said states with higher personal health care spending per capita generally had higher per capita income and larger elderly populations.  States on the lower end of the health care spending curve had younger populations, lower incomes and less access to health insurance.

“If these trends persist, these states would be most likely to have the greatest potential number of people eligible for the Medicaid expansion or exchange coverage,” CMMS concluded.   Georgia estimates federal health care reform could force 650,000 more people into the Medicaid system which already is the fastest growing segment of state expense.

Thursday December 15 Update:  The following ideas are from Policy Foundation senior fellow Frank Stephenson, chair at the Berry College Department of Economics in Rome, Georgia:  “I’d be careful interpreting that number.  It could be good news — Georgia has lower medical costs because of lower litigation costs, a more competitive medical marketplace, or healthier people.  Or it could be bad news—we’re poor and can’t afford sufficient health care.”

Stephenson said, “It could also be skewed by the overall lower cost of living in Georgia (and the South more generally) or by differences in demographics.  I wouldn’t go so far as to say it’s a meaningless statistic but it should come with lots of caveats, explanation, etc.  It’d be particularly regrettable if folks with a statist agenda used it to steer the state government’s agenda.”

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