NCPA - National Center for Policy Analysis

Medicare Thieves

September 30, 2011

No one knows for sure exactly how much fraud exists in the Medicare system, but most experts agree that it costs billions of dollars each year.  While every politician with a pulse talks a big game about eliminating Medicare "waste, fraud, and abuse," career criminals and unscrupulous providers take advantage of the government's lax controls over Medicare payments to line their pockets with taxpayer dollars.  The waste of this system and the fortunes that can be made by cheating it are astounding, says Peter Suderman, an associate editor of Reason magazine.

  • Between 2007 and early 2011, the federal government reports having won convictions against 990 individuals in fraud cases totaling $2.3 billion.
  • While estimates vary greatly, the Government Accountability Office estimated $48 billion for Medicare's "improper payments" each year.
  • With $36 trillion in unfunded liabilities just over the horizon, Medicare's own actuaries project insolvency by 2024.

While no one can be sure exactly how much money is distributed fraudulently each year, there is little doubt that it is a not-insignificant sum.  Sensational news stories abound constantly as culprits are caught and, after pleading guilty, explain the ease with which they gamed process.  Public anger at the theft of their tax dollars invites reform, but experts are quick to point out the exceptional difficulties that one must overcome in order to reform an organization that processes 4.4 million claims per day.

Congress and the White House, however, are making a bid to try.  Recognizing that the private sector does not suffer from such high rates of corruption and fraud, politicians are making progress in recommending that Medicare implement crucial practices used in the market.  Notably among these, a data-crunching computer algorithm system to analyze aggregate usage over time and track patient histories (similar to credit card company software) will be granted a trial run.  While results from this new resource are as of yet inconclusive, the implementation of such a procedure suggests that the federal government is finally ready to address Medicare fraud.

Source: Peter Suderman, "Medicare Thieves," Reason Magazine, October 2011.

For text:


Browse more articles on Health Issues