Regional Variations and Productivity Puzzles in Health Care

Finkelstein and Skinner revisit the long-standing finding that U.S. regions with higher medical utilization often do not achieve better population health. They synthesize newer evidence showing that both provider-side supply and patient-side demand shape regional spending, complicating the older conclusion that high-spending areas simply contain easily removable waste.

The authors find substantial productivity variation across providers but much less certainty about why entire regions differ. Their policy conclusion is disciplined: large efficiency gains may be possible, but achieving them requires identifying the organizational and market mechanisms that produce better health rather than assuming spending cuts alone will reproduce high-performing care.