MEDICARE COSTS IN URBAN AREAS AND THE SUPPLY OF PRIMARY-CARE PHYSICIANS

Background. The supply of primary care physicians may be important det erminants of health care costs. We examined the association between pr imary care physician supply and geographic location with respect to va riation in Medicare Supplementary Medical Insurance (Part B) reimburse ment. Methods. We performed an analysis of data from all US metropolit an counties. Physician supply data were derived from the American Medi cal Association Masterfile. Medicare Part B reimbursements and enrollm ent data came from the Health Care Financing Administration. Physician supply was calculated for family practice, general practice, general internal medicine, and non-primary care specialties. Linear regression was used to test the association of physician supply and Medicare cos ts and to adjust for potential confounding variables. Results. The ave rage Medicare Part B reimbursement per enrollee was $1283. After adjus ting for local price differences and county characteristics, a greater supply of family physicians and general internists tvas significantly associated with lower Medicare Part B reimbursements. The reduction i n reimbursements between counties in the highest quintile of family ph ysician supply and the lowest quintile was $261 per enrollee. In contr ast, a greater supply of general practitioners and non-primary care ph ysicians was associated with higher reimbursements per enrollee. Concl usions. These results add to the evidence that an increased supply of primary care physicians is associated with lower health care costs. If this association is causal, it supports the theory that increasing th e number of primary care physicians map lower health care costs.