Tomorrow morning, Robin Hanson is chairing a very interesting dissertation defense:

One part finds that US firms that self-insure, thereby avoiding many health insurance regulations, spend 18-25% more per employee on medicine…

The take-away:

For those who think med is great, this seems a strong argument for
reducing med regulation; burdensome regulations seem to get in the way
of folks buying the med they want.  Those like me who think we are
over-treated should admit this favors more regulation; burdensome
regulation makes medicine seem less valuable, and so folks buy less of

My questions: Couldn’t this just show that contrary to all their bad publicity, health insurers are actually relatively good at controlling costs – that what appears to be bureaucratic pettiness serves a useful function?  And if so, exactly how exactly do health insurers achieve these economies?  Could it be that morale-wise it’s easier to turn down cost-ineffective treatments for your customers’ employees than for your own employees?