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Health Care Costs in McAllen, TX

There have been several articles recently on the scandal of Medicare costs in McAllen, TX. The Medicare reimbursement rate is twice as high as in El Paso, another border town 800 miles northwest. A perfect example is the long and completely bogus article by Atul Gawande on the subject published in the New Yorker:

McAllen has another distinction, too: it is one of the most expensive health-care markets in the country. Only Miami--which has much higher labor and living costs--spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.

The author speculates about obesity, alcoholism, poverty, Tex-Mex food, and diabetes, but those rates are comparable to comparable towns. The high costs persist:
McAllen costs Medicare seven thousand dollars more per person each year than does the average city in America. But not, so far as one can tell, because it's delivering better health care.

Later he considers malpractice, but shoots that down because state laws in Texas make lawsuits difficult and expensive for plaintiffs. The rest of the article is speculation and anecdotes about overly aggressive care and unnecessary testing, with no data to back it up. NY Times repeats the case without question, as does The Dallas Morning News, Huffington Post, and EconLog. They all miss the point, by a mile.

The answer of course is obvious if you look at a map:McAllen.gif

All the retired American expatriates living in Mexico, and there are hundreds of thousands of them, descend on McAllen for their Medicare treatments. If the procedures are too complicated and expensive to pay for out of pocket in Mexico, they drive to the closest town they can find in the good old U.S.A. That town is McAllen, TX.

The article claims that McAllen spends $15,000 per person across their Medicare enrollees in the McAllen area. I would bet that half or more is spent on people who don't live or enroll in Medicare in McAllen. Their costs are lumped in with those who live in McAllen, even though they live in Mexico and enroll in Medicare in their former home towns in other states.

Keep the McAllen experience in mind when you hear people making claims about Local Medical Communities and how terrible overuse of medical care is, or how doctors practice predatory medicine, or hospitals and health insurers are motivated by greed and high profit margins. The Obama administration is counting on solving the health care spending by forcing all Local Medical Communities to have the same $/person as Rochester, MN. I hope whoever they assign to study the issue understands the expatriates and their habits. The New Yorker article goes on:

When you look across the spectrum from Grand Junction to McAllen--and the almost threefold difference in the costs of care--you come to realize that we are witnessing a battle for the soul of American medicine. Somewhere in the United States at this moment, a patient with chest pain, or a tumor, or a cough is seeing a doctor. And the damning question we have to ask is whether the doctor is set up to meet the needs of the patient, first and foremost, or to maximize revenue.
Except the cost per person are not really higher in McAllen. If you add the expatriates to the population, the cost per person drops down to the national average. Oh. Never mind.


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Comments (12)

Charlie, you don't understa... (Below threshold)

Charlie, you don't understand. Lib rags like the New Yorker, NYT, Boston Globe, etc. start from a fixed (liberal) point of view, then craft the story around that view. Saves one heck of a lot of time and money that would have been spent on 'research'. That's nasty stuff. You might find facts that challenge your point of view. Can't have that. The liberal elite know all.

There is another reason tha... (Below threshold)

There is another reason that health care is high along the border towns. That has to do with the illegals that cross the border to get free care on the American taxpayers' dime. To be sure, they don't go to a regular doctor, because they can't afford that. They go to the emergency rooms to be treated. As we know, emergency rooms are required by federal law to treat anyone, regardless of the cost.

Good to hear from you on th... (Below threshold)

Good to hear from you on this stupid misread of the situation by the stupid people that want to make health care even worse.

There are still folks out there who are working harder to make a profit than to provide reasonable health care. Beware the glossy ads and the smiling, welcoming faces. They are smart and they are entrepreneurs, not health care providers.

And the damning qu... (Below threshold)
And the damning question we have to ask is whether the doctor is set up to meet the needs of the patient, first and foremost, or to maximize revenue.
You mean, doctors might actually expect to be paid for their work? They aren't a bunch of volunteers and they value money? How droll! We must make sure that only those who aren't driven by the idea of profits enter the medical profession. I'm sure that in doing so, an army of highly skilled, good, socially-conscious doctors will ride in on flying unicorns to replace the greedy, capitalist ones we no longer have.

I'm reminded of an episode of House, where the patient of the week was some doctor who treated TB in Africa, and turned his own sickness into a media event to condemn the greedy pharmaceutical companies for not giving away their medicine. Anyway, at one point, House calls him out for doing the whole thing because he's an attention whore. The doctor's reply was "Who care's why I'm doing it? If it helps people, what's it matter?" Unfortunately, House didn't call him on his hypocrisy. If the pharmaceutical companies are making pills for profit, who cares, as long as it's helping people?

The only ones allowed to pr... (Below threshold)

The only ones allowed to prosper unquestioned in this society are liberal do gooders like the big eared clown in the White House.

The article does say "per e... (Below threshold)

The article does say "per enrollee." One would think that the question of treatment to non-enrollees would be fleshed out, since this stat is the foundation for the whole article. Especially since so many people interviewed seemed surprised by that statistic.
Is the author saying that docs should go on salary everywhere? Qualified people won't put up with the hell of med school and residency just to go on salary. That's probably where we're headed, though.

Thx for this. Jaffe & othe... (Below threshold)

Thx for this. Jaffe & others pointed to Guwande's article as proof no medmal crisis exists, since McAllen obviously "does twice as much" & yet no medmal increase was noted. Jaffe failed to note the expatriate influx, as well as the TX tort reform statute on the books. TX limits noneconomic damages to $250K & all but eliminates punitives, making medmal less attractive to plaintiff attys...therefore tort reform works when limits are imposed (contrary to Obama's denial Monday).

1) Many folks do put up wit... (Below threshold)

1) Many folks do put up with the "hell" of med school and residency and fellowship to go on salary. They fill your HMO's, multispecialty clinics, emergency rooms, and urgent care clinics. Their care patterns are sculpted by their bosses. And just what are the administrators' real motivations and goals?
2) Entrepreneur physicians are not necessarily providing unnecessary or bloated care, but the temptation is great and there are plenty who succumb to it. The proper check to balance this would be to have the patient (consumer) responsible and in charge of disbursement, rather than a third party payor. The third party payors take a huge chunk of the cash meant to provide health care that never sees the light of the exam or operating room. Patients are too easily mislead when they aren't directly paying the bills.
3) When patients are paying for their drugs, they are VERY receptive to generics that cost $10 for 90 days versus non-generics that cost them over $100 a month. When they only have a small co pay, they have little motivation to keep the total drug cost down.
4) Its a battle, but one that can be won, to convince folks that if they want to save money on their health care they need to save money not buying cigarettes, Coke and Irish Mist by the gallon. But it is impossible when the State is paying both for their health care AND their cigarettes, Coke and Irish Mist.

Sure, there will always be ... (Below threshold)

Sure, there will always be people getting out of med school who will opt for a salaried position. That's their choice. But many people choose med school, at least in part, because of the high income potential and relative freedom in their profession.
Again, it is hard to discern exactly what the author of this article is advocating, but if all docs are forced into an HMO-type setting with scheduled salaries, a lot of qualified people won't put up with four years of grad school costing $ 250,000 to $ 500,000 plus one to three years of residency at limited pay to get there. Especially when, as with this article, the reason for it is based on faulty information. In the middle of what is being called a "health care crisis" the last thing we want is to discourage qualified people from entering the profession.
Third party payers do take a profit and there are some abuses in the system. But the medical insurance companies are providing a service in administration and in use of market leverage to keep costs lower than they would otherwise be. One problem with letting individuals control the payments (among many other problems) is the catastrophic event--cardio surgery or extended cancer treatment or the like. Individuals facing this won't be able to pay for it. As with all insurance, medical insurance calculates a way to spread that risk.
[At issue ultimately is who is better to administer care, use market leverage, and spread risk--private enterprise or the government?]
I doubt that many patients care whether their drugs are generic or brand name. I'm assuming that nearly all insurance plans require use of a generic when available. The problem is that manufacturers resist generic in order to protect their patents--as well they should, considering the expense and risk involved in developing new medicine.

What a minute. Quidnunc poo... (Below threshold)
Peter Sullivan:

What a minute. Quidnunc pooh-poohs the New Yorker article for having its facts wrong, but he then goes on to say "I would bet that half or more is spent on people who don't live or enroll in Medicare in McAllen." No studies cited, no data, nuthin', just "I would bet . . .." Maybe he's right, but maybe he's wrong, but all we have is his opinion, with a hypothesis thrown in. Gawande at least looked at data, spoke with a lot of people, and discussed medical costs and quality of care in plenty of locations besides McAllen. His article has a lot more credibility than Quidnunc's.

re 9:We probably a... (Below threshold)

re 9:

We probably agree more than you think, but here are a few responses:

"But the medical insurance companies are providing a service in administration and in use of market leverage to keep costs lower than they would otherwise be." HMO insurance folks are providing a different "service" than fee for service. The administrative costs of these programs have not been shown to reap significant health benefits for enrollees.

"One problem with letting individuals control the payments (among many other problems) is the catastrophic event--cardio surgery or extended cancer treatment or the like. Individuals facing this won't be able to pay for it." Most proposals to give the patient more control advocate for a REAL catastrophic coverage insurance WITHOUT the mandated coverage for more mundane and routine costs.

There are two areas where a lot of money gets wasted: in end-of-life care in the last six months of life, where futile treatments assuage patient anxiety and family guilt about "doing everything we can" and line the pocketbooks of hospitals and providers; and in chronic disease management of self-inflicted disease from morbid obesity, tobacco and alcohol.

I've seen many cases where the the proportion of how much of their inheritance is going to pay for grandmom's ICU stay as she's dying from cancer kindles or extinguishes their demands "to do everything" before she dies. Sad that there isn't an empathetic tenor to their decision, but that's the way some people think and decide things about how to spend part of YOUR pool of insurance monies.

When a patient is "empowered" to understand that they make a series of choices every day that affects their discomforts, and due to a limited budget have to decide between spending money on perpetuating their discomfort or ameliorating it, (rather than having their cake and eating it too) whatever their decision is, the health care funds spent on them will decrease either because they choose to continue to smoke, over eat and drink from the expense of their health care fund, or they limit the destructive behaviors, and ultimately require less health care spending. As long as there is a disconnect, they have little motivation to stop the self-destructive behaviors. A metaphor for ills of our society in general.

"I doubt that many patients care whether their drugs are generic or brand name." I doubt that too. But I do know that those with "excellent" pharmacy coverage want the "best" drugs that cost the system the most, and once they lose their coverage are ardent in their search for slightly less effective but a whole lot cheaper drug that accomplishes the same effect. Amazing, huh?

Peter's right about my post... (Below threshold)

Peter's right about my post not citing data. All I know is from my parents and their friends who live in Guadalajara. The American retiree population in Jalisco is around 100,000, and all their friends go to Brownsville/McAllen for non-emergency health care. The hospitals in Guadalajara are excellent, but most don't accept Medicare. That's anecdotal at best.






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