The Index of Health Ownership holds that big government spending and over regulation are harmful to people's health.  Unfortunately, many in academia are unwilling to consider this hypothesis.  So, they wallow in confusion over the reasons why states vary so much in health spending, unrelated to quality.

Yesterday, economists from the Centers for Medicare & Medicaid Services published an article in Health Affairs that described wide variation in health spending per capita in 2004: from $3,972 in Utah to $6,683 in Massachusetts.  (Interestingly, the one area where the federal government has complete control of health spending fared the worst: DC spent a mind-boggling $8,295 per capital on health care.)

An interesting twist in this analysis is that it measures spending by the state where a patient lives, not where the service is provided.  That is, if you live in Camden, NJ, and get treated in Philadelphia hospital, the authors allocate the cost to New Jersey, not Pennsylvania.

I was pleased to see that Utah, ranked first in the Index of Health Ownership, was the lowest per capital spender.  Is there a relationship between a state's IHOP ranking and its rank in spending per capita?  Yes! Spearman rank correlation is a measurement that ranges between minus 1 and 1: a correlation of one means that the two rankings correspond exactly to each other, which minus one means the opposite.  The correlation between IHOP and state spending rankings is 0.22 - nicely positive, which indicates that there is likely some relationship between a high degree of health ownership (that is, minimal government control), and lower per capita health spending.*

Unfortunately, the scholars commenting on the article ignore the role of big government in divorcing health costs from quality.  The Commonwealth Fund's Karen Davis and Cathy Schoen point out that there is "either no relationship or a negative relationship between spending and quality".  Nevertheless, they call for "much stronger policies", that is, bigger government, based on their own analysis of the relative quality of Medicare versus private spending (which I have discussed previously).

However, the prize for scary totalitarian health care statement of the week goes to Professor Sara Rosenbaum of George Washington University (and a former Clinton White House policy staffer), who argues that "the variations help explain whay some states can achieve health care reform on their own, without a huge infusion of federal money, while others cannot. In a low-spending state like New Mexico, you have less money in the health care system that can be recaptured (emphasis mine) and invested in coverage for the uninsured".

In other words, the role of the federal government is to take away whatever health ownership your state government might have left you.  Note the one word absent from all these scholars' discussions of health spending: the individual.

*There is a little multicollinearity here, because health insurance premiums are an input to IHOP and, of course, an input to overall state health health spending.