Is funding biased against rural residents?

The answer is ‘yes’ according to a paper by Probst, Eberth, and Crouch (2019). The reason they cite is “structural urbanism”. Economists may be to blame.

Consider a typical economist’s perspective. One wants to balance costs and benefits. If one wants ‘fair’ allocation per person, then of course equal funding will give more funding to urban centers. However, even if funding were equal, this would result in less care for rural residents. The cost to provide services in rural areas is often more expensive. Additional transportation costs and the potential need to increase wages to attract skilled workers (e.g., physicians and nurses) to work in rural areas mean that the cost of providing services is higher in rural areas.

Even if additional funding were allocated to offset additional costs of treating individuals in rural areas, health outcomes would not be equal. Socioeconomic status is lower in rural areas. Baseline health outcomes are worse.

In 2017 age-adjusted death rates were higher for rural than for urban adults of working age (ages 25–64) and older (ages 65 and older), across all racial/ethnic categories.

Socioeconomic status also differs, but perhaps not as much as many may think.

Rural poverty rates were 44 percent higher than urban rates during the 1970s, on average, and the differential had dropped to 18 percent by the 2010s. Similarly, the proportion of rural adults with a college degree, while remaining lower than the rate in urban areas, increased from 15.5 percent in 2000 to 19.0 percent in 2015.

Thus, to get equitable outcomes, even more spending would be needed. Health care funding has also evolved in ways where funding is more proportional to individuals.

The Hill-Burton program, which operated in the period 1946–97, gave states funds to assess their health needs and construct or expand hospital facilities where appropriate, with priority going to rural areas.41 Since the program’s end, with the exception of funding through business loans provided by the USDA, the federal role in the financing of health care has focused principally on providing health insurance to needy people. Medicare and Medicaid ensure that individuals, not communities, have financial resources for care. As a result, communities with large populations that can yield revenue have flourishing health care institutions, while those with fewer residents have lost ground. A wave of rural hospital closures in the 1980s led to the adjustment of rural hospital payment mechanisms through the development of multiple specialized reimbursement categories, such as critical access hospitals and sole community hospitals.

This article clearly articulates the problem of the current funding approach, but it is not clear what the right answer is. Should health care funding to be equitable by person? Should it be allocate in an attempt to equalize outcomes? Should it be done to incentivize people to move to where health care can be provided more efficiently (i.e., urban areas)? If additional funds should be allocated to rural residents (on a per person basis), than by how much?

These are not easy questions to answer but Probst, Eberth and Crouch have a nice article to highlight some of the issues to consider.

from Healthcare Economist https://ift.tt/2P2BJdh