Profit and Fraud "Some troubling questions about our government's ability to manage a medical bureaucracy." by Jeffrey H. Anderson

Profit and Fraud
"Some troubling questions about our government's ability to manage a medical bureaucracy."
by Jeffrey H. Anderson
11/04/2009 12:00:00 AM

According to 60 Minutes, cocaine trafficking has now given way to Medicare fraud as the number-one illicit enterprise in South Florida. Both 60 Minutes and the Washington Post report that nationwide Medicare fraud now costs American taxpayers $60 billion a year.

The 60 Minutes story is fully of juicy anecdotes about government incompetence. There's the criminal who says that stealing from Medicare is so "easy" that "it was ridiculous." There's the lady who for six years has been telling Medicare officials that strange and extravagant charges keep showing up on her explanations of Medicare benefits--charges that officials still have yet to prevent from accruing, and from being paid by tax dollars. And there's the man on Medicare who used his own hands and arms to open up his explanation of benefits, only to read that Medicare had been billed--and had paid--for two new (prosthetic) arms on his behalf.

Even 60 Minutes says that the rampant nature of Medicare fraud raises "some troubling questions about our government's ability to manage a medical bureaucracy."

Given all of this, it's no wonder that since 1970 the costs of Medicare have risen over 25 percent more, per patient, than the combined costs of all other health care in America. And that's even without counting the Medicare prescription drug benefit.

Sixty billion dollars in Medicare fraud is a lot of money, but how can we really put it into perspective? President Obama talks a lot about insurance companies and their "record profits." Let's compare those numbers.

Fortune 500 tallies show that last year's profits for the ten largest private insurance companies in America were $8 billion--combined. Even the single most profitable insurance company didn't make five percent as much as what Medicare lost to fraud.

It may be surprising that you could multiply the profits of America's ten largest private insurance companies seven-fold and that Medicare would still have managed to lose more money than they make. But try this one on for size: The Washington Post reports that a high-school dropout in Miami submitted false Medicare claims from her laptop across four years, bilking Medicare out of $105 million. Four of the ten largest private insurance companies failed to make $105 million in combined profits. That's right: A lone criminal grossed more from Medicare fraud than four out of the ten largest private insurance companies collectively netted in profits.