Wide variations in Medicare spending per capita are observed across geographic regions. In 1996, age, sex and race adjusted spending for traditional (fee-for-service) Medicare in the Miami region was $7,783, compared to the $3,700 spent in the Minneapolis region. Little is known about the causes of such differences; are they the consequence of patient preferences, market structure, physician beliefs, the availability of health care resources, or some combination of all factors? To better understand the dimensions and implications of health care intensity, we intend to: 1. Characterize health care intensity at the level of regions or hospitals using the clinically rich data available from population-based Medicare administrative files. We will develop models that allow us to examine dynamic associations among components of health care intensity, particularly for patient suffering from chronic disease and near the end of life. 2. Determine whether preferences of patients are aligned with the intensity and mix of care that they get. We test this hypothesis by comparing the stated preferences of patients in the telephone survey with the intensity and nature of care that they receive. We will consider whether education, race, or other factors makes it more likely that patients get what they say they want. 3. Study the role of patient preferences, physician beliefs, and the structure of the health care market in explaining differences in intensity across regions or hospitals. We seek to explain why Miami spends twice as much in Medicare expenditures as Minneapolis; is it because patients want the extra care, because of a larger share of for-profit hospitals, the importance of managed care in Minneapolis, or physician beliefs about appropriate treatment? 4. Explore how preferences evolve over time. Do patient preferences gradually evolve towards the characteristics of the region in which people receive their care?
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