The biggest component of health care spending for all of these states by a wide margin is on hospital care. Here’s how the states stack up against each other and the U.S. as a whole on hospital spending per capita.
Source: Centers for Medicaid and Medicare Services.
Could publicly traded hospitals that have a heavy presence in these states be good investing choices? Scratch HCA Holdings Inc (NYSE:HCA) off the list. The nation’s largest hospital chain operates 162 hospitals, but only one of them is in any of the seven states on our list.
Community Health Systems (NYSE:CYH) counts 135 hospitals spread across 29 states in its fold. Like HCA Holdings Inc (NYSE:HCA), though, only one of Community’s hospitals is located in a state among those with the highest medical costs.
Health Management Associates Inc (NYSE:HMA) operates 71 hospitals in 15 states. None of them are in the states mentioned earlier. What about Tenet Healthcare Corp (NYSE:THC)? Tenet has 49 hospitals — with a grand total of zero in our list of states.
All of these hospital stocks have served investors quite well over the past year, though. Community Health, Health Management Associates Inc (NYSE:HMA), and Tenet have more than doubled, while HCA Holdings Inc (NYSE:HCA) shares are up “only” 53%.
These impressive gains stem largely from the perceived impact of Obamacare. The expectation is that hospitals’ financials will improve as more currently uninsured patients obtain health insurance.
Could these hospitals have done even better if they operated in the states on our list? Probably not. That’s because five of the seven states with the highest medical costs also are in the top 10 list of states with the highest cost of living. More money might come in, but more money would also likely go out due to higher costs.
Statistics and the truth
All of this reminds me of a quote attributed to George Canning: “I can prove anything by statistics except the truth.” These seven states do statistically have the highest per capita spending on health care. However, these numbers in isolation don’t allow us to draw any firm conclusions about why the spending is higher.
If you live in Massachusetts, Alaska, or the other states, you’re spending more on health care than many Americans. You‘re probably also spending more on plenty of other goods and services. On the other hand, there’s a good chance you make more money also. When we follow the money, we need to follow all of the money.
The article 7 States With the Highest Health Care Costs originally appeared on Fool.com.
Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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