Location Impacts Healthcare Cost, Quality, and Utilization

If you’re like me, when you hear the phrase, “location matters,” you immediately think of real estate. But location plays a more critical role in our lives than I knew. Where we live affects our overall health, life expectancy, utilization, quality, and the costs we pay for medical care and insurance.  

Health Rankings, by State

The United Health Foundation published its annual health rankings (see Figure 1) and the healthiest state in 2017 was Massachusetts. The Commonwealth has been steadily moving up the list since 1990. Rounding out the top 5 of the health rankings are Hawaii, Vermont, Utah, and Connecticut.  

There are a number of factors that impact each state’s ranking, including tobacco use, obesity, poverty rates, education levels, chronic disease prevalence, and the percentage of residents with health insurance coverage.

The least healthy state is Mississippi, followed by Louisiana, Arkansas, Alabama, and West Virginia. According to the report, Mississippi and Louisiana have major health challenges, including a high prevalence of smoking, obesity, and children in poverty.

Figure 1. US Health Ranking, by State | Source: United Health Foundation

Life Expectancy

Americans have an average life expectancy of 78.8 years (CDC), which is much lower than other developed countries like Japan, Iceland, and Israel. But we tend to live longer than residents of Denmark, Mexico, and China. Life expectancy is also impacted by the state we live in (see Figure 2).

Figure 2. Average US Life Expectancy, by State | Source: TitleMax

Hawaii residents live the longest, on average 81.3 years. Folks from Mississippi aren’t so lucky; their life expectancy is only 74.7 years. 

It’s not surprising that residents of wealthier counties and regions have longer life spans, but I was shocked at how wide the gap can be for people living a few blocks apart. The Robert Wood Johnson Foundation created an online tool to show how long people are living in your neighborhood. Just input your zip code and you’ll get the results.   

Health Insurance Premiums and Cost Sharing

Healthcare costs continue to rise, with the average American spending more than $10,000 on healthcare (CMS). What we pay depends on where we live. Figure 3 shows the 5 states where health insurance premiums are the highest and lowest (SHADAC).  The amount workers pay out-of-pocket for single person coverage under employer-sponsored healthcare plans also varies by state, as shown in Figure 4 (SHADAC). 

Figure 3. States with the Highest and Lowest Worker-Paid Insurance Premiums | Source: SHADAC
Figure 4. Amount Paid for Single Coverage, by State |Source: SHADAC

Read my previous blog Is Cost-Shifting Reducing Your Healthcare Costs in the Long-Run to learn more.

Office Visit Copayments

Healthcare costs are rising across the board. Primary care and specialty physician office visits are no exception. Employees are also shouldering a larger burden of the cost in the form of copays, as shown in Figure 5 (SHADAC).  

Source: SHADAC

Postponing Doctor Visits

The increasing burden of cost sharing has caused some people to postpone medical care. According to the Kaiser Family Foundation, the states where people are most likely to postpone doctor visits (see Figure 6) are:

  1. Texas: 19.6%
  2. Mississippi: 18.2%
  3. Louisiana: 17.1%
  4. Georgia: 17.0%
  5. Nevada: 16.8%
Figure 6. Percent of Adults Reporting Not Seeing a Doctor in the Past 12 Months Because of Cost (Kaiser Family Foundation)

Quality of Care

Because the number of healthcare facilities and providers varies by state, it’s no surprise that the quality of care delivered also varies. The Agency for Healthcare Research and Quality created State Snapshots, an interactive tool that assesses 3 dimensions of care quality: type of care (such as preventive or chronic), care setting (like hospitals or nursing homes) and clinical areas (such as patients with cancer or diabetes).

The states with the highest quality of care include:    

  1. Delaware
  2. Iowa
  3. Maine
  4. Massachusetts
  5. Minnesota

Final Thoughts

I was really curious to learn how geography can influence health care costs and hope you found it interesting. I also hope the results of my curiosity show that local, regional, and national data can help you benchmark how your benefits programs are performing, but it can’t tell you why your programs are performing the way they are. For that, you need data specific to your population. Is poor health to blame for increased workers’ compensation rates? Are your employees postponing care because they can’t afford the out-of-pocket costs?

If you can’t answer specific questions like these, you’re blindly making changes to your benefits programs. You use data in all other areas of your business to make decisions. It’s time to use data to target the real issues driving your costs and member health outcomes.

You may also be interested in:
Poor Health Increases Disability and Workers’ Compensation Costs
Use Predictive and Prescriptive Analytics to Control Benefits Costs & Improve Member Health
Analytics Gets to the Root of Your Employee Benefit Cost Drivers
What Data Analytics Can Tell You About Your Prescription Benefits

Sashi Segu

Sashi Segu

Sashi Segu, Counsel, has participated in cases and provided legal expertise on HIPAA, ERISA, privacy, compliance, and other healthcare-related fields. Sashi left Innovu in March 2019 to pursue other interests.

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