Last month, 60 Minutes did an alarming report on the $60 billion-a-year Medicare fraud industry. Reporter Steve Kroft began by cautioning that “this story may raise your blood pressure” and “raise some troubling questions about our government’s ability to manage a medical bureaucracy.” The venerable CBS investigative news program spoke with an FBI agent who warned that Medicare fraud had become a “way bigger” problem than the drug trade in Miami. While the prospect of Crockett and Tubbs kicking down south Florida nursing home doors might not appeal to Hollywood, taxpayers should take this matter very seriously. To put the $60 billion in fraud in perspective, Medicare loses seven times as much money in fraud every year than the combined profits of the 14 health insurance companies on the Fortune 500.
Earlier this week, the federal government quietly issued a report largely confirming 60 Minutes’ findings. The government report claimed Medicare lost “only” $47 billion, but that still means the government admits that 12.4 percent of all Medicare payments are fraudulent. And it’s not just Medicare either. The same report notes that 9.6 percent of Medicaid claims, amounting to $18.1 billion, are improper. Recall that the House-passed health care reform bill would greatly expand the number of Americans on Medicaid, while doing next to nothing to address fraud. The nation’s chief health care actuary estimates that the House bill would save a meager $60 million. In other words, PelosiCare would reduce Medicare and Medicaid fraud by a whopping .0009 percent.
Approximately 90 million Americans currently receive health care coverage through Medicare or Medicaid. Some econometrics studies suggest that the “public option” Democrats have been pushing for in health reform legislation would put the government in charge of administering health care for an additional 88 million people. More than doubling the number of Americans in government health plans would send the fraud problem through the roof.
Further, Democrats have repeatedly justified government-run health care by claiming the administrative costs would be much lower. They never mention that administrative costs for private insurers are higher because they do a much better job combating fraud. And critics of Democratic health reform have often wondered why they don’t apply their proposals to Medicare and Medicaid first to see if they work, before inflicting them on everybody else. However, the unwillingness to deal with fraud shows the government can’t or won’t fix existing programs, so why should we expect them to do anything differently with new programs?