One more point to add to the Galt-Teles-Kleiman conversation (in the three posts immediately below) on health care cost, quality, and innovation:
We can reduce cost without squeezing quality or innovation by reducing the level of provider fraud in the system. Malcolm Sparrow estimates (see License to Steal) that something like 10% of the total cost of the health care system is flat-out stolen by rip-off artists, especially in the durable medical equipment sector and through the provision of medically useless but high-profit-margin tests. Some of this activity involves deliberate waste; much of it involves simply billing for services never rendered. Of course there’s no way to reduce the fraud level to zero, but Sparrow makes a case that we’re currently way under-invested in fraud prevention.