Where Health Care is Really, Really Expensive

McAllen, Texas….. is one of the most expensive health-care markets in the country. Only Miami – which has much higher labor and living costs – spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.

Compared with patients in El Paso and nationwide, patients in McAllen got more of pretty much everything – more diagnostic testing, more hospital treatment, more surgery, more home care…… McAllen costs Medicare seven thousand dollars more per person each year than does the average city in America. But not, so far as one can tell, because it's delivering better health care.

Comments (2)

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  1. Greg Scandlen says:


    A friend who knows the Texas market very well writes —

    I have just started looking at this and it seems pretty clear that Gawande drew the wrong conclusions. The MOST notable difference between McAllen and ANYWHERE else, according to the published Dartmouth data at the link below, is that McAllen has FAR FEWER physicians. The result of this is that there is very little ambulatory care, far more inpatient days and a larger proportion of the care is delivered in the emergency room. It’s the SHORTAGE
    of physicians in McAllen that is causing cost to be so high. I don’t know how Gawande missed it.


  2. John R. Graham says:

    As always, Dr. Gawande has written a thoughtful article. I have deep respect for the decades of research by the Dartmouth crew (Drs. Wennberg, Fisher, et al.). Nevertheless, as Greg Scandlen has pointed out elsewhere, they tend to focus on the supply-side variables rather than the demand-side ones. Mr. Scandlen has pointed out that one of the small-area variations in hysterectomies noted in the early research in New England in the 1970s could be somewhat explained by the fact that one town was French Canadian (Roman Catholic) and its neighbor was Yankee (Protestant), so the women in the former town could have preferred hysterectomies to birth-control measures.

    Also, Dr. Gawande relies only on Medicare payments to conclude that McAllen is extraordinarilly expensive, whereas more recent research concludes that when private payers are factored in, spending results are quite different [R.A. Cooper, “States With More Health Spending Have Better Quality Care: Lessons about Medicare,” Health Affairs 28,1(2009),w103-w115,WebExclusive published online 12/4/08].

    Unfortunately, Dr. Gawande concludes that patients controlling payments will not address the problem unless someone is responsible for the “totality” of care, reflecting the views of one of his colleagues that “sheep” (patients) cannot negotiate with “wolves” (doctors). The experience of medical tourism shows that this is incorrect. Indeed if it were, the government would banish all voluntary transactions where the supplier has superior information to the consumer: that is, ALL transactions – full stop.