Health care cost and health care fraud

Malcolm Sparrow claims that 10% of total health care spending goes to con artists. If we can reduce the incidence of fraud, we can squeeze costs without squeezing quality or innovation.

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.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: