Health care reform is definitely at the top of the domestic policy agenda. But before we move ahead on significant changes in the health care markets in the United States, it is critical that we flesh out our understanding of one of the leading rationales for reform. The argument goes something like this. Health care spending varies dramatically from region to region without producing commensurate variation in health outcomes. Indeed, higher health care spending per capita is not consistently associated with better health outcomes. The observed disconnect between health care spending and outcomes suggests that through a more efficient use of health resources, spending could be cut substantially.