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Megan McArdle

There's No Miracle Cure for Health-Care Costs

Hospitals' cash flow is more important than individual prices.
Sticker shock won't go away.

Sticker shock won't go away.

Photographer: Spencer Platt

You’ve probably read about huge disparities in regional Medicare spending, without equivalently huge disparities in health outcomes. You’ve probably read that quite a few times. It is one of the most favorite data points for people writing about health-care costs, because it suggests there’s a magic pot of money that can be neatly drained out of the system without making anyone worse off.

Unfortunately, like the other magic pots of money that people thought they’d found in the health-care system, this one turns out to be underwhelming.  A new study looks at hospital spending not just by Medicare, but by private insurers. And it turns out that areas where Medicare spending is low often have high private spending, and vice versa.