clock menu more-arrow no yes

McAllen, Texas, used to be everything wrong with American health care. Not anymore.

Brad Barket/Getty Images

Between writing best-selling books, operating on cancer patients, and helping fight the Ebola crisis, Harvard surgeon Atul Gawande appears to have pulled off another victory in the past year: showing that it is, in fact, possible to dramatically reduce health-care costs.

A few years ago, Gawande wrote a lengthy piece in the New Yorker about McAllen, Texas: a city that spent way more than the rest of the country on health care but didn't deliver better results (sometimes, the results were worse). "The difference was that McAllen’s doctors were ordering more of almost everything — diagnostic testing, hospital admissions, procedures," Gawande wrote.

His article ran in the summer of 2009, when Congress was in the throes of the health reform debate. And McAllen became a stand-in for everything wrong with American health care: doctors ordering more tests just for the heck of it, but not actually helping anyone get healthier. President Obama brought up the article in private meetings and public speeches. It was, as one headline put it, "The Texas Town at the Center of the Healthcare Debate."

This year, Gawande went back to McAllen and found something surprising: in the aftermath of the article, the Texas city had dramatically reduced health spending. And nobody seems to have gotten any sicker; they just got rid of the care that wasn't doing any good.

As it turns out, the cost of a Medicare patient has flattened across the country, El Paso included. U.S. health-care inflation is the lowest it has been in more than fifty years. Most startling of all, McAllen has been changing its ways. Between 2009 and 2012, its costs dropped almost three thousand dollars per Medicare recipient. Skinner projects the total savings to taxpayers to have reached almost half a billion dollars by the end of 2014. The hope of reform had been to simply "bend the curve." This was savings on an unprecedented scale.

This is partly a story about McAllen, and what happens to a city that becomes synonymous with bad health care. Doctors there, as Gawande writes, began to reevaluate the type of care they provided.

The major overuse of home-health-care services proved particularly embarrassing. "We didn’t know that home health was a thousand dollars a month" for each patient, Peña said. People in the medical community had never paid attention to how much of it they were ordering or how little of it was really needed. He led monthly staff meetings with more than four hundred local physicians and began encouraging them to be more mindful about signing home-health-care orders. Within a year, home-health-care agencies started going out of business.

But this is also, in a way, a national story: as Gawande notes, Medicare spending has grown particularly slowly over the past five years. Some of that likely reflects an overall economic slowdown with the recession, but there are lots of health-care economists who think this change is partially structural — that doctors are doing something differently that has helped lower health-care costs.

You see that particularly in one Obamacare program that has saved $384 million over two years by changing the way it pays doctors — rewarding them for helping patients get better, not for how many tests and scans they provide.

That Obamacare experiment and McAllen are two glimmers of hope in the health-care system. They suggest that with the proper leadership and tenacity, it really is possible to improve the health-care system in the way Gawande's original article and Obamacare hoped — to lower costs by driving out unnecessary care. It's happening right now.

Sign up for the newsletter Sign up for The Weeds

Get our essential policy newsletter delivered Fridays.