When it comes to housing costs or gourmet meals, San Francisco’s cost of living rivals those in high-priced environs like Midtown Manhattan or Honolulu.

But in terms of average Medicare costs, as measured by the national Dartmouth Atlas research project, the city chimes in with notably moderate rates.

At an annual average of $8,331 per Medicare enrollee in 2006, San Francisco’s costs were about half those in Miami, and significantly lower than metropolitan areas like Dallas, Los Angeles, and New York.

That apparent contradiction isn’t a surprise to those who know the city’s health history. For decades, San Francisco and the Bay Area have been centers of HMO-style managed care, integrated health-care systems and use of health-related information technology to help curb the costs of keeping residents healthy, and controlling the cost of care when they do need relatively expensive treatments.

And even before that, some local health-care experts speculate, San Francisco’s history and unique, laid-back, tolerant attitude paved the way for its current medical culture.

Competition with Kaiser, for example, which operates an integrated system with its own hospitals, medical clinics, and tightly affiliated medical group, “has caused [San Francisco Bay Area] fee-for-service physicians to practice differently,” says Hal Luft, director of the Palo Alto Medical Foundation’s Research Institute and longtime head of the Institute for Health Policy Studies at the University of California, San Francisco.

The city’s history and health-care-market dynamics combined to form “a culture, a way of doing things” that results in physicians and patients behaving differently and having different expectations, Luft says. That translates into less of a rush to focus on expensive tests and procedures than in higher-cost areas, he says.

Overuse of health-care services—sometimes driven by doctors or hospitals trying to boost reimbursement, sometimes by patients who want “more” care even if it’s not the right kind—is largely responsible for higher costs elsewhere, according to Luft and Dr. Allan Pont, chief medical officer and vice president of medical affairs at San Francisco’s California Pacific Medical Center, the city’s largest private hospital.

Doctors in San Francisco “tend to be interested in the science of medicine rather than the business of medicine,” Pont maintains, and work within a managed-care-infused culture where “there’s a certain rigorousness to not unnecessarily waste resources.”