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Atul Gawande – Health Care’s Price Conundrum

The more expensive it is, the better it must be. That’s how people used to think about health-care costs. As has become apparent in recent years, however, this is flat wrong. The costs of care vary wildly depending on where you live—by three hundred per cent or more, as I reported in “The Cost Conundrum,” in 2009. And research has found no consistent relationship between cost and quality across the country. Some of the most expensive places are among the most mediocre.

But nearly all this research was based on the analysis of government insurance programs, especially Medicare, the program for the elderly. Private insurers do not have to make information on whom they pay, how much, or what they pay for publicly available. Only government insurance programs do. A fascinating study out this week, however, manages to crack open the black box of private insurance. It analyzes payment data compiled, for the first time, from three of the country’s largest commercial insurers—Aetna, Humana, and UnitedHealthcare—which cover fourteen per cent of the U.S. population.

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