We have long known that spending on health care can vary a lot depending on where you live in the United States, which would be pretty hard to explain even if a lot of the bills weren't getting paid by the same customer, the federal government.
How long people live varies a lot by region, too. What makes these two observations interesting to economists is that the relationship you would expect — more spending on health care going hand-in-hand with a longer and healthier life — doesn't hold up at all.
Health economist Amy Finkelstein, in Minneapolis last week to deliver the dinner speech at the Minneapolis Federal Reserve Bank's latest Opportunity & Inclusive Growth conference, said it was just a coincidence that Minneapolis was mentioned both in her research work and in her talk here.
We just happen to be the way she frames the best question: Why is it we spend half as much on health care in the Twin Cities compared with Miami? Is it us? Or is it something about where we live, like maybe our health system here?
Hate to give away the answer right away, but if you guess "both," you are awfully close.
Finkelstein, of the Massachusetts Institute of Technology, was an academic star long before she was named a MacArthur Fellow earlier this month, one of 25 so-called genius grant winners this year. And just a couple of minutes into her nearly hourlong presentation here, it became obvious why this kind of research really matters.
If big differences in health spending were only about differences in people, maybe if they had much healthier lifestyle habits in low-cost areas of the country and didn't need to see the doctor as often, then policymakers would know what to work on. Maybe, for example, in high-cost areas they would invest in programs to help people manage chronic problems like diabetes.
On the other hand, if the spending difference seems to be all about the place, maybe with much higher spending in communities with for-profit health care systems run by people hellbent on making a lot of money, then that presents a completely different problem.