The widely quoted data from the Dartmouth Atlas has been almost as widely misunderstood to mean "more is less". How something so counter-intuitive and contrary to much everyday experience could get so much argumentative traction is a testament to a cognitive weakness that even Dr. Kahneman failed to document and explain in his book Thinking Fast and Slow. Maybe he does, it is simply gullibility or buying into data that confirm your priors.
Dr. Ashish K Jha sets the record straighter .See here.
Here is part of what he had to say.
“The Dartmouth Atlas shows that among communities, there are large variations in health care costs and large variations in quality, and some with high costs also have low quality. This convinces a lot of people that there can be a free lunch—that if we can get spending down in high-costs communities like McAllen, Texas, to levels seen in Minnesota, where spending is low and quality is high, we can save money and improve outcomes. But how you implement this in policy is hard, and often policy makers misunderstand what to do."
Dr, Jha's study is certainty not the first to counter some of the over-blown nonsense about the relationship to spending and outcomes in health issue. Here is an earlier on post dealing in part with some of the enlightening work of Dr. Richard Cooper in that regard. Also here is a thoughtful discussion of Cooper's work by one of my favorite economists, Arnold Kling.
The Atlas used coarse grained data, regional variations in cost and outcome, but was used to make much more fine grained conclusions by those who hyped the study .Individual hospital or (God forbid) individual patient data were not analyzed yet policy recommendations were applied to the more fine grained entities.