Medicare Enrollees in Minnesota are Hospitalized More and Incur Higher Hospital Costs per Person than Rest of U.S.
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By: Jeffrey Maser Nov. 17, 2017
Within a Medicare population, hospitalization rates and average cost per person are naturally correlated. When more people are admitted, more procedures are performed. When more procedures are performed and treatments are administered, more money is paid by Medicare. When more money is paid by the total pool, the average cost per person rises. To analyze whether this perception would be detectable in the data, Dexur analysts measured hospitalization rates and average cost per person for each U.S. state’s Medicare population.
Within this study, hospitalization rate is defined as total discharges from Medicare enrollees divided by the population’s total Medicare enrollment. This is an indicator of how often the average Medicare enrollee within a population are having to use their coverage for a hospital discharge. Average cost per person is defined as the total Medicare payments from discharges accounted for by the population divided by the population’s total Medicare enrollment.
When we examined the relation between these two measures, we found a correlation of 0.76, which indicates a strong positive correlation. These two measures for the state of Minnesota are a strong example of the correlation. The table below includes data for the states with the 10 highest average payments per Medicare enrollee.
As the data shows, Minnesota had by far the highest average payment per enrollee as well as the highest inpatient hospitalization rate. With an average Medicare payment per enrollee of $5,490, the average payment for a Medicare enrollee in Minnesota was over $2,000 above the national average and over $1,500 higher than the next highest state, which was New York at $3,982 per enrollee. Similarly, with a rate of 44.98%, the inpatient hospitalization rate for Minnesota Medicare enrollees was over 15% higher than the national average and over 10% higher than the next highest state, which was Louisiana at 34.86%.
For contrast, the lowest payment per enrollee out of any state was a mere $2,363 for Utah Medicare enrollees. The lowest inpatient hospitalization rate was found in Hawaii, where the rate was 15.77%. Medicare enrollees within Puerto Rico, a territory of the U.S., paid $1,093 per Medicare enrollee and had an inpatient hospitalization rate of 14.38%. Although the numbers themselves can only illuminate the clear connection between these measures nationwide, in-depth examination of state practices may shed light on the factors behind this strong correlation.
| Average Medicare Payment per Enrollee Rank | State / U.S. Territory | Medicare Enrollments (Fee for Service - Original Medicare) | Total Medicare Payments ($) | Total Medicare Discharges | Average Medicare Payment per Enrollee ($) | Inpatient Hospitalization Rate (%) |
|---|---|---|---|---|---|---|
| 1 | Minnesota | 417984 | 2294642421 | 188011 | 5490 | 44.98 |
| 2 | New York | 2126356 | 8468053719 | 603538 | 3982 | 28.38 |
| 3 | Massachusetts | 978905 | 3857177224 | 301969 | 3940 | 30.85 |
| 4 | Maryland | 865101 | 3402425815 | 245598 | 3933 | 28.39 |
| 5 | Michigan | 1246144 | 4720418799 | 426770 | 3788 | 34.25 |
| 6 | New Jersey | 1267461 | 4768266144 | 376707 | 3762 | 29.72 |
| 7 | California | 3351074 | 12532494912 | 816608 | 3740 | 24.37 |
| 8 | Louisiana | 557093 | 2053758111 | 194213 | 3687 | 34.86 |
| 9 | Nevada | 311276 | 1131160807 | 86247 | 3634 | 27.71 |
| 10 | Texas | 2488251 | 9031943307 | 794634 | 3630 | 31.94 |
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