Experts have long thought that the communities that spend the least on Medicare—cutting down on wasteful spending while keeping their residents healthy—were the answer to all our health care woes.
Grand Junction, Colorado, exemplified this thinking, according to an article today in The New York Times. It boasts remarkably healthy residents and the third-lowest Medicare spending nationwide. That combination has prompted glowing television broadcasts, a New Yorker article, and a visit from President Obama, who, in his 2009 address to a local high school, called Grand Junction “a model of better, cheaper health care.”
New research casts doubt on all that, says the Upshot. In fact, it suggests that the way experts have assessed health care markets for the last few years may be misguided.
While Grand Junction does indeed boast low Medicare costs, it also has the 42nd-highest private health care costs nationwide. The city and others like it were able maintain such low Medicare costs by consolidating its rival hospitals into one system, cutting down not only on unnecessary procedures, but also on competition. The tradeoff is that, without competition, the hospital system had very little incentive to reduce prices. It was therefore able to keep its private insurance rates high.