NCPA - National Center for Policy Analysis


April 28, 2010

Every year, thousands of crooks bilk taxpayers out of billions of dollars, says Tevi Troy, former Deputy Secretary of the Department of Health and Human Services and a visiting senior fellow at the Hudson Institute.

While statistics on fraud are somewhat hard to come by, the available numbers are truly frightening: 

  • A 2009 Government Accountability Office study found that 10.5 percent of Medicaid payments in fiscal year 2008 were improper.
  • A Thompson Reuters study in October of 2009 found there to be somewhere between $600 billion and $850 billion annually in health care waste, which includes fraud but also inefficiency and medical errors.
  • Nationwide estimates of fraud alone tend to estimate it between $60 billion and $100 billion. 

Part of the reason for all of this waste is the way the government processes payments.   It is under pressure to pay bills quickly so that providers and suppliers don't opt out of the system, and payments are investigated only if the Centers for Medicare and Medicaid Services (CMS) or the Office of Inspector General (OIG) later discovers or is informed about some impropriety.  By that point, the cash is hard to recover, says Troy. 

During its effort to pass its health care bill, the Obama administration pressed the issue of waste, fraud and abuse.  However, when it comes to ObamaCare's solutions, the program offers very little, says Troy: 

  • The new law achieves much of its "waste, fraud and abuse" savings not by cutting actual waste, fraud and abuse, but by scaling back the Medicare Advantage program.
  • By spending a trillion taxpayer dollars in the current system, and specifically by putting 16 million more people on Medicaid, it actually increases the number of opportunities for fraud.
  • And it does not take the bipartisan anti-fraud steps that President Obama appeared to embrace leading up to and following the February health care summit.  

Ultimately, however, only the repeal of ObamaCare -- and a decisive move away from third-party payments -- will solve the problem that the president has just exacerbated, says Troy. 

Source: Tevi Troy, "Calling All Con Artists," National Review, April 19, 2010.


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