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A R E A  V A R I A T I O N S : 
F L O R I D A  E L D E R L Y
W E B  E X C L U S I V E   

13 August 2003  
  

Floridian Exceptionalism

Why do elderly Floridians use more health care services than their peers in the other states and have lower mortality rates?


by Victor R. Fuchs

ABSTRACT:

Elderly Floridians use much more medical care and have much lower mortality rates than do their peers in other regions of the country. After demographic and other variables are controlled for, the differential between Florida and the rest of the United States is 25 percent for utilization and 10 percent for mortality among whites ages 65–84. This paper summarizes the facts about Floridian exceptionalism and reviews various possible explanations: physician inducement of utilization, differences in preferences, selective migration into and out of the state, climate, and social interactions, among others. Readers are invited to suggest their own explanations and their policy recommendations, if any.

The elderly residents of Florida are very different from their peers in other regions of the country in two important respects. First, they use much more medical care. Second, they have much lower mortality rates. The higher utilization of care has been reported by John Wennberg and his colleagues in numerous studies.¹ In a comprehensive, cross-area study of whites ages 65–84 in 1989–1991, Mark McClellan, Jonathan Skinner, and I found that age-sex standardized utilization in Florida was 17 percent above the national average.² After population size, education, real income, and health status are also controlled for, the differential is larger: approximately 25 percent.

Because Florida's elderly are on average in much better health than the elderly in other areas of the country, one might expect that use of care in Florida also would be well below average. It is, therefore, all the more notable that it is much above average. Moreover, the finding of high utilization in the Fuchs-McClellan-Skinner study is based on an actual count of quantities of services, weighted by the national reimbursement rate for each service. Location was assigned by the person's state of official residence, regardless of where the care was received, to take account of seasonal migration of many elderly Floridians.³

The lower mortality in Florida has not received as much attention as the higher utilization, but it is equally noteworthy. For whites ages 65–84, the age-sex standardized death rate in Florida in 1989-1991 was the lowest of any area—10 percent below the U.S. average. After other variables were controlled for, the differential was slightly larger. As with utilization, the location of mortality is determined by the deceased person's state of official residence.

In this paper I highlight both aspects of Floridian exceptionalism, review various explanations that have been proposed, and consider possible policy inferences. It is hoped that other investigators will suggest their own explanations and their policy recommendations, if any.

Variation Within Florida

Not all areas of Florida are equally "exceptional," as may be seen in Exhibit 1, which focuses on the fifteen metropolitan statistical areas (MSAs) with populations of more than 100,000. Actual utilization and mortality are compared with predicted values for each area. The predicted values are derived from regressions across 209 US MSAs greater than 100,000 (Florida excluded). The regression coefficient for each variable is multiplied by the value of the variable in each Florida MSA to obtain the predicted value. We see that the utilization and mortality differentials between actual and predicted tend to be very large in South Florida, but we also see that "exceptionalism" is not limited to Miami. Sarasota, West Palm Beach, and Fort Myers all have a higher percentage differential in utilization and mortality than Miami.

One might think that patients' high utilization and low mortality would be very satisfying to physicians in South Florida, but that doesn't seem to be the case. A recent study of career satisfaction among physicians in twelve US locations found that the percentage who report being "somewhat or very dissatisfied" was highest in Miami.⁴

In North Florida, Daytona Beach and Ocala have differentials similar to the southern MSAs, but in the northernmost MSAs—Pensacola, Jacksonville, and Gainesville—mortality is higher than that predicted by the regression. Utilization is also higher than predicted, but the differential is much smaller than in the southern MSAs.

In broad terms, the facts about Floridian exceptionalism are beyond dispute. But when we turn to possible explanations, the picture is far from clear. There are many hypotheses, but in my judgment none have been confirmed with rigorous quantitative studies.

Possible Explanations For Higher Utilization

Physician-induced demand. One possible explanation is that Florida physicians induce their patients to use more care. Unlike many economists, I do not reject this explanation a priori.⁵ Indeed, in two earlier studies I found some empirical support for physician inducement.⁶ Also supportive of the physician-inducement hypothesis is the result in the Fuchs-McClellan-Skinner study that higher utilization is much more evident for outpatient than for inpatient care. The study also shows that among types of outpatient care in Florida, diagnostic and treatment services were used relatively much more than evaluation and management. Outpatient diagnostic and treatment services are probably more susceptible to physician inducement than hospitalization or evaluation and management.

There are, however, at least two problems with physician inducement as a major explanation. First, a correlation between physician supply and utilization is not sufficient evidence of physician inducement. If there is an abnormally large supply of physicians in Florida, that could be a response to an abnormally large demand for medical care by Floridians. The explanation that a large supply induces a large demand requires a demonstration that the large supply appears in Florida independently—that is, not in response to demand. This independent appearance of a large supply of physicians in Florida has not been demonstrated.

A second reason for questioning the importance of the physician-inducement explanation is the magnitude of the excess utilization; it is far in excess of any reasonable response to excess supply. In my earlier studies I found that the elasticity of demand with respect to independent differences in supply is somewhere between 0.25 and 0.50. Thus, for physician inducement to explain an increase in utilization of 25 percent, there would have to be an independent increase in supply of 50–100 percent. Increases of this magnitude seem implausible.

One could imagine a version of physician inducement that does not depend upon excess supply if we assumed that Florida physicians are more willing than their peers in other states to substitute income for leisure. This is possible, but such a large regional difference in this trade-off has not been proved.

Differences in preferences. It is theoretically possible that Florida residents, especially those in South Florida, have a stronger demand for medical care, resulting from preferences that differ from the national average. That people vary in their desire to see physicians, undergo tests, take drugs, and the like is well known at a high level of generality. Consider, for instance, the difference in use of care between a Christian Scientist and a hypochondriac. What is not known is whether the preferences of Florida residents are sufficiently different from others to account for a sizable portion of the utilization differential.

Why should the preferences of Florida's elderly differ from those of their peers in other areas? One possibility is selective in-migration. According to this view, migrants come to Florida in part because they are very health-conscious and predisposed to use more medical care. Another possibility is that their preferences for care are altered once they are in Florida, as a result of their interactions with their peers in age-segregated communities. Patients' views and expectations about what constitutes appropriate care for any given symptom or diagnosis are shaped in large part by what their friends and neighbors received in similar circumstances.

Possible Explanations For Lower Mortality

Selective in-migration. Among the elderly, many Florida residents migrate there from other states. In general, people who migrate tend to be healthier than those who do not. Attempts to test this explanation are handicapped by limitations of data and uncertainty about how to treat the length of residency in Florida. If people who came to Florida fifteen or twenty years ago have low mortality, should that be attributed to selective in-migration or to the health benefits of living in Florida? Two unpublished attempts to test for selectivity—one based on Florida residents who were living in a different state during the previous three years and one based on Florida residents who obtained their Social Security number in another state—did not provide much support for the migration hypothesis. Indeed, the one-third who received their Social Security number in Florida had slightly lower mortality than those who received their number in some other region. Selective in-migration is, in my judgment, still a viable hypothesis, but its validity has not been established.

Selective out-migration. Each year a small percentage of Florida's elderly move out of the state, often because they are in very poor health and want to be near their children. The age- and sex-adjusted mortality rate of out-migrants in the year after they leave Florida is considerably higher than the rate of those who stay, but even if all the recent out-migrant deaths are attributed to Florida, the effect is small because the number leaving the state at ages 65–84 is small.

Florida's benign climate. Because the climate in Florida (especially South Florida) is relatively benign most of the year, it is possible, indeed likely, that most elderly in Florida pursue a physically active life that includes golf, tennis, swimming, walking, and the like. Such activity is considered beneficial to health. Climate is probably a particularly important determinant of activity at older ages, and physical activity at older ages may be particularly important for health.

More social interaction. Many of the elderly in Florida live in age-segregated communities where there is a great deal of social interaction, including meals, social functions, and helping one another in times of physical or emotional distress. Health experts consider social interaction to be beneficial to health. It is possible that holding the amount of social interaction constant, interactions with younger people would be even more beneficial for the health of the elderly, but this "quality of interaction" effect could be swamped by the much greater "quantity of interaction" effect of the age-segregated communities of Florida, especially South Florida.

Greater use of medical care. Greater use of medical care by Florida elderly is a well-established fact. Could greater utilization explain lower mortality? I doubt it, because it has always been difficult to show that differences in availability or use of medical care across areas of the country has much if any favorable effect on mortality. One interesting example that supports the hypothesis of no effect is a comparison across areas that differ in population size. Utilization (especially outpatient) is substantially higher for white elderly residents of large MSAs than for those in small towns or rural areas (controlling for region, socioeconomic, and other variables), but mortality is slightly higher in the large MSAs (again controlling for other variables, including cigarette smoking, air pollution, and obesity).⁷

Other explanations. The principal purpose of publishing this essay is to reach out to a wide range of readers with diverse expertise and experience who may suggest additional explanations for Floridian exceptionalism or offer judgments about the validity and relative importance of those that have been proposed. Explanations that are amenable to empirical tests would be particularly welcome.

Policy Implications

In the absence of a firm understanding of the reasons for Floridian exceptionalism, it may be premature to draw inferences for policy. With regard to utilization, some analysts have suggested that greater use of medical care in Florida is unfair to the elderly in other areas and therefore should be curbed. But implementation of such a policy poses a dilemma. There is surely considerable variation within areas where, holding health status constant, some elderly use much more care than others. Should this also be curbed? How? With regard to mortality, a better understanding of the low mortality in Florida could lead to recommendations that might benefit the elderly in all areas. Readers who believe they understand the underlying causes of Floridian exceptionalism are encouraged to state what their policy recommendations would be and why.

The author gratefully acknowledges the support of the Robert Wood Johnson Foundation through a grant to the National Bureau of Economic Research (NBER) for his research. The views expressed in this study are those of the author and do not reflect those of the foundation or the NBER.

NOTES

1. J.E. Wennberg, E.S. Fisher, and J.S. Skinner, "Geography and the Debate over Medicare Reform," 13 February 2002, www.healthaffairs.org/WebExclusives/Wennberg_Web_Excl_021302.htm (8 July 2003); and J.E. Wennberg and M.M. Cooper, eds., The Dartmouth Atlas of Health Care 1998 (Chicago: American Health Association Press, 1998).
2. V.R. Fuchs, M. McClellan, and J. Skinner, "Area Differences in Utilization of Medical Care and Mortality among US Elderly," in Perspectives on the Economics of Aging, ed. D.A. Wise (Chicago: University of Chicago Press, forthcoming); and NBER Working Paper no. 8628 (Cambridge, Mass.: National Bureau of Economic Research, May 2001).
3. Official residence is determined by where Social Security retirement checks are received.
4. B.E. London, J. Reschovsky, and D. Blumenthal, "Changes in Career Satisfaction among Primary Care and Specialist Physicians, 1997-2001,"Journal of the American Medical Association 289, no. 4 (2003): 442-449.
5. See C.E. Phelps, Health Economics, 2d ed. (New York: Addison-Wesley Educational Publishers, 1997), 246-247.
6. V.R. Fuchs and M. Kramer, "Determinants of Expenditures for Physicians' Services in the United States, 1948-1968," Occasional Paper 116 (Cambridge, Mass.: NBER/DHEW, March 1973); and V.R. Fuchs, "The Supply of Surgeons and the Demand for Operations," in Journal of Human Resources 13, Supplement (1978): 35-56.
7. Fuchs et al., "Area Differences," Tables 7 and 9.

Victor Fuchs (fuchs{at}newage3.stanford.edu) is the Henry J. Kaiser Jr. Professor Emeritus at Stanford University and a research associate at the National Bureau of Economic Research in Stanford, California.

Read related perspectives by John M. Bertko, Lynn Etheredge, Jill Quadagno, and Jonathan Skinner and John E. Wennberg.

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