Health Care vs. the Rest of the Economy
Think for a moment about how other large businesses operate in the modern world. FedEx and UPS track a combined 23 million packages each day in real time. You can go online, for free, and track the movement of your item from pickup to delivery. Exceedingly rare are stories of FedEx or UPS losing packages or about how those companies are rife with fraud.
Large, sophisticated retailers in the supermarket, clothing or auto parts industries can tell you every night how many cans of soup, pairs of pants, or spark plugs they sold that day in every one of their facilities all over the world.
The American credit card industry involves over $2 trillion in transactions per year which is nearly the size of the healthcare sector. There are over 700 million credit cards in circulation, millions of vendors, and countless items that can be purchased with a credit card. Yet total credit card fraud is a fraction of 1 percent. If you have ever made a large purchase in a city you do not typically frequent, you’ve probably been asked to show ID by the clerk.
Now look at healthcare. A Government Accountability Office study in January of 2009 estimated that a full 10 percent of paid Medicaid claims in 2007 were improper. That is a total of $32.7 billion. Several GAO studies have documented fraud and abuse in the durable medical equipment area that is several steps beyond laughable. Those GAO reports are consistent with OIG and state-level investigations too. Medicare and Medicaid lose billions of dollars annually to DME fraud, an industry that has attracted organized crime because the windfalls are so great and the risk is so low. There are shopping malls in Miami with over a dozen DME providers within 200 yards of each other.
See my full testimony – “Catch Me if You Can: Solutions to Stop Medicare and Medicaid Fraud”
Watch the video of the testimony (starts at 111:15).
Wouldn’t it be more exact to say “now look at government run health care”? The private health care sector knows what it paid, for what, to whom. The public sector hasn’t a clue–in many cases it can’t even tell if it owes someone benefits or not.
Jim, very good post.
It’s interesting how Medicare and Medicaid are often touted as having such low overhead compared to private insurers. However, if you add in all the fraudulent, inappropriate or wasteful claims, both programs suffer by comparison.
I’ll right away clutch your rss feed as I can’t to find your email subscription hyperlink or newsletter service. Do you have any? Please allow me recognise so that I may subscribe. Thanks.