Thursday, June 20, 2019

Medicare For All? A False Sense Efficiency with Armstrong & Getty

As most of the folks running for President in 2020 profess their love for government provided healthcare and sing the siren song of “Medicare for All” you are likely to hear claims about Medicare’s efficiency and efficacy. Here are the facts they like to leave out:
  • In 1965, government experts projected that in 1990, on an inflation-adjusted basis, Medicare would cost $12 billion. In reality, Medicare cost $107 billion in 1990.
  • For nearly one-third of calls into the Medicaid/Medicare hotline reporting waste, fraud and abuse, government workers take over 4 months to begin investigation.
  • Supporters like to point out that Medicare uses 98% of its funding on claims and only 2% on administration while private insurers generally spend 85% on claims and 15% on administration. This, they claim is superior efficiency. This fails to acknowledge the rampant fraud, misuse and abuse within Medicare. 
    • Independent experts tell us that as much as a third to half of all Medicare spending is improper or wasteful. Malcolm K. Sparrow, a professor at the Kennedy School of Government at Harvard University whose book License to Steal is a classic in the field, thinks that Medicare’s fraud-related losses may run “as high as 35%” of its budget. 
    • An infinitesimal amount of Medicare’s budget is spent on fraud detection, so yes, it is easy to get to 98% claim payment when 1 in every 3 claims you pay is fraudulent and you spend little to no time detecting fraud. The less effort Medicare takes to prevent fraud and the more money it lavishes on criminals, the more efficient it looks. (Source for these stats: "Overcharged: Why Americans Pay Too Much for Health Care" by Charles Silver, David A. Hyman Chapter 16.) 
  • In 2015, the outside contractors that handle bills for Medicare processed 1.22 billion claims. That’s almost 3.4 million claims per day.
  • Medicare and Medicaid receive something like three billion claims a year. For a human being to spend five minutes reviewing each claim would require 125,000 people each working 2,000 hours a year. That’s not enough time to find and flag a fraud, much less to investigate one 
  • From 2009 to 2012, Medicare paid a total of $43 billion for durable medical equipment (DME). According to some reports, more than 60% of that amount—$25 billion plus—may have been paid out improperly. Unsurprisingly, DME suppliers lead the list of entities investigated for criminal health care fraud violations. But the federal government has recovered only about 3 percent of overpayment. (Source: Chapter 12 in Overcharged.) 
Other statistics:
  • Medicare/Medicaid pay 80 cents on the dollar for services, forcing private plans to pay $1.30 for that same service.
  • 65% of all healthcare is paid by taxpayers nationally, 70% in California. 
  • Medicare for all will cost an additional $32 Trillion over 10 years. Obamacare only costs $2T in comparison. 
  • Medicare is currently on pace to run out of money by 2026. 
  • US Spends $3.7 Trillion per year on health (today Medicare is just under a Trillion).