Joe Paduda has a great post (“Wasted Dollars“) reviewing a study by Alex Swedlow. The study focuses on waste in the health care sector with a focus on Workers Compensation. Mr. Paduda concludes the following:
There’s a lesson here for the non-workers comp world, and policy wonks in particular. It is this – providers overtreat, to the detriment of the patient and the payer. Draconian measures such as flat limits on the amount of treatment do work.
With health reform on the horizon, here’s a great example of the waste in our health care ‘system’, waste that benefits the provider.
Paduda claims that Draconian measure work. They key is that policymakers/bureaucrats set these limits at an economically efficient amount. If the medical care becomes too limited (e.g.: the number of doctors visits allowed is below the optimal level for many patients) then patient care could be hurt. If the limits are too high, than there may be no cost savings.
In the California Workers Comp example, Paduda says regulators got it right.