Medicare costs in urban areas and the supply of primary care physicians

J Fam Pract. 1996 Jul;43(1):33-9.


Background: The supply of primary care physicians may be important determinants of health care costs. We examined the association between primary care physician supply and geographic location with respect to variation in Medicare Supplementary Medical Insurance (Part B) reimbursement.

Methods: We performed an analysis of data from all US metropolitan counties. Physician supply data were derived from the American Medical Association Masterfile. Medicare Part B reimbursements and enrollment data came from the Health Care Financing Administration. Physician supply was calculated for family practice, general internal medicine, and non-primary care specialties. Linear regression was used to test the association of physician supply and Medicare costs and to adjust for potential confounding variables.

Results: The average Medicare Part B reimbursement per enrollee was $1283. After adjusting for local price differences and county characteristics, a greater supply of family physicians and general internists was significantly associated with lower Medicare Part B reimbursements. The reduction in reimbursements between counties in the highest quintile of family physician supply and the lowest quintile was $261 per enrollee. In contrast, a greater supply of general practitioners and non-primary care physicians was associated with higher reimbursements per enrollee.

Conclusions: These results add to the evidence than 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 the number of primary care physicians may lower health care costs.

MeSH terms

  • Aged
  • Aged, 80 and over
  • Costs and Cost Analysis
  • Humans
  • Medicare Part B / economics*
  • Physicians, Family / economics
  • Physicians, Family / supply & distribution*
  • Primary Health Care / economics*
  • United States
  • Urban Population
  • Workforce