Sun-Times Op-Ed: Medicare Fraud Proves Fed-run Health Care Won't Work
Just weeks ago, Jose Luis Perez fled the United States before law enforcement officials could arrest him, but not before he allegedly scammed $56 million in taxpayer money by defrauding Medicare. Described by the FBI as an "international traveler," Perez is just one of many criminals to take Medicare for millions of taxpayer dollars before jetting for safer and more exotic locales abroad.
As Washington intensely debates health-care reform, the cost of care has simultaneously emerged as the single biggest impetus for reform and the single largest obstacle to enacting reform. Democratic proposals have looked at the cost issue as a form of political capital to be exploited for political advantage, yet their proposed solution of a new government-run plan with a price tag in the trillions will do nothing to lower costs. That is hardly a solution at all. If Democrats were serious about substantively lowering costs, they would pursue real opportunities to meaningfully do so, starting with clamping down on waste, fraud and abuse in Medicare and Medicaid.
Waste and fraud occur frequently throughout the federal bureaucracy. Medicare and Medicaid, however, are exploited at breathtaking levels. Some estimates suggest that 10 percent of all health-care costs are fraudulent -- no small potatoes considering Medicare alone will cost $486 billion this year. Fraud permeates our entire country, including towns I represent in the western suburbs. Sometimes law enforcement officials catch these criminals and bring them to justice, but they often flee the U.S., or the fraud is simply never discovered.
This is not a failure of our law enforcement community. The problem is Medicare's antiquated pay-first-then-chase system of reimbursing false claims. Medicare does not effectively guard against fraud on the front end -- cutting checks without thorough fraud-check measures -- so law enforcement officials must pursue fraudulent claims after reimbursement. It is the equivalent of a retail store processing a customer's credit card approval long after the clothes are hanging in the closet. It simply doesn't make sense. Medicare needs reform to check for fraud at the "point of sale," similar to prudent businesses.
Even given the systemic problems, many are making the case for modeling a new government-run option on our Medicare system, at our own peril. Their principle argument is that Medicare's administrative costs are quite low compared with private health insurers. The difference is that private health insurers do not experience anywhere near the volume of fraud or waste, while Medicare is fraught with billions upon billions.
While Medicare and Medicaid are undoubtedly in peril, there is a real way forward to lower costs and reform health care. The credit card industry, which handles $11 trillion in transactions yearly, suffers only .047 percent in fraud thanks to a system of real-time data review which stops fraud and abuse at the point of sale. With the technology already available, Medicare and Medicaid should incorporate a real-time data review system to check for fraud and abuse at the point of sale -- a system that would cost little in comparison to the billions that would likely be saved.
Fundamental reforms to Medicare and Medicaid would undoubtedly save billions of taxpayer dollars. That could lower costs, which could expand access to care and provide a real step forward in solving our health-care woes. Without it, a new government-run health-care plan would bring more waste, fraud and abuse, all on the backs of the American taxpayer.