America’s Healthcare Cost Mystery: Why Some Counties Spend 4x More Than Others

In a landmark study that examined over 40 billion insurance claims, researchers have uncovered dramatic disparities in U.S. healthcare spending, with some counties spending nearly four times as much per person as others – and the reasons why might surprise you.

The comprehensive analysis, published today in JAMA and JAMA Health Forum, reveals that Nassau County in New York’s metropolitan area spends $13,332 per person on healthcare – the highest in the nation and nearly quadruple the $3,410 spent in Idaho’s Clark County, which has among the lowest figures.

Even more striking are the variations within individual states. In Florida, for instance, Sumter County, a suburban area of Orlando, spends $11,680 per person – almost double its neighbor Osceola County’s $5,899, despite their close proximity.

“The contrast in ambulatory care spending across the country highlights the urgent need to address gaps in access to primary care that take into account the extent to which people use services based on their geographic location, age, and health conditions,” explains lead author Dr. Joseph Dieleman, Associate Professor at the Institute for Health Metrics and Evaluation.

The study by researchers at the University of Washington’s School of Medicine provides the most detailed look yet at healthcare spending across 3,110 U.S. counties, analyzing costs by four payers, 148 health conditions, and seven types of care.

Type 2 diabetes emerged as the most expensive single health condition, costing $144 billion nationally. Other top expenses include musculoskeletal disorders at $109 billion, oral disorders at $93 billion, and heart disease at $81 billion.

When examining types of care, outpatient services account for the largest share at 42% of expenditures, totaling more than $1 trillion. Hospital inpatient care follows at 24% ($578 billion), while prescription drugs make up 14% ($331 billion).

Age plays a crucial role in spending patterns, with more than 40% of expenses going to those over 65 years old, while less than 12% is spent on those under 20. The highest per capita spending occurs in the 85-and-older age group.

The research identified utilization – how often people use healthcare services – as the primary driver of cost variations, accounting for 65% of spending differences. Service prices and intensity explained 24%, while disease prevalence surprisingly accounted for only 7%.

These findings may help explain why some states have found more efficient ways to deliver care. Utah, for example, maintains lower spending rates across all types of care, largely due to its younger population profile. Meanwhile, Alaska’s high spending is driven by elevated rates for ambulatory, inpatient, and emergency department care.

“If people had better insurance coverage, they would be more likely to pursue regular health checkups, potentially reducing the need for emergency care,” notes Dr. Dieleman. “This change would also lead to better health outcomes and allow emergency providers to focus on patients with urgent medical needs.”

As policymakers grapple with rising healthcare costs, this unprecedented county-level analysis provides crucial insights into where and why healthcare spending varies so dramatically across America – and potentially, how to make it more efficient and equitable for all.