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Inefficiencies Drive Up Health Care Costs

On the Commonwealth Fund’s State Scorecard “avoidable health costs” dimension – a measure that speaks to efficiency within the health care system – Texas ranked 48^th overall. Texas came up amongst three other states (Maryland, Nevada and Louisiana) with the highest proportion of Medicare patients readmitted to the hospital within 30 days, a finding that the study shows “could be a key indicator of underlying care patterns that increase costs.”[1] In fact, total annual Medicare costs in the five states with the highest 30-day readmissions (Texas included) have average Medicare costs 38 percent higher than those states with the lowest readmission rates.[2] Texas also reappeared amongst the states with the highest rates of admission and readmission among nursing home residents.[3]

The last dimension measured by the Commonwealth Fund’s State Scorecard was “healthy lives” which refers to measures of mortality and disease prevalence. Here, the state received an average ranking (24^th) and was above the state median on all but one dimension – mortality amenable to health care.[4] To see the full state scorecard for Texas or any other state, visit www.commonwealthfund.org/statescorecard, and use the interactive map to view scorecard results for each state. In addition the chart below from the Commonwealth Fund's Scorecard on Texas presents a unique look at how Texas would have fared if it performed as the top state for each of the dimensions. Because Texas has such a large population and such a high uninsured rate, Texas statistics skew those for the country as a whole. If Texas’ performance were to improve to the level of the best-performing state, according to the Commonwealth Fund State Scorecard, 2,680,422 adults and 965,127 children would have health insurance,[5] bringing down the country’s overall uninsured rate by one percentage point.

Estimated Impact of Improving Texas' Performance

Source: “State Scorecard: Texas.” The Commonwealth Foundation. 30 July 2007 <http://www.commonwealthfund.org/statescorecard/statescorecard_show.htm?doc_id=496088>.

NOTES: Estimates of improvements in state performance were calculated as follows: for each indicator, the difference between the best-performing state's rate and the subject state's rate was multiplied by the applicable subpopulation of individuals in the subject state. (For the readmissions indicator, the difference in rates was multiplied by the applicable number of Medicare hospitalizations in the subject state.) Medicare cost-savings from reduced hospitalizations were calculated using the average cost of the applicable hospitalizations in the subject state. Calculations do not account for potentially interactive effects of indicators (e.g., insurance coverage increases the likelihood of having a usual source of care and receiving preventive care).