“Entitlement bandits”

That’s the title of a very interesting – and infuriating! – article in National Review Online by Michael F. Cannon. Here’s a brief excerpt to whet your appetite.

The three most salient characteristics of Medicare and Medicaid fraud are: It’s brazen, it’s ubiquitous, and it’s other people’s money, so nobody cares.

Consider some of the fraud schemes discovered in recent years.

  • In Brooklyn, a dentist billed taxpayers for nearly 1,000 procedures in a single day.
  • A Houston doctor with a criminal record took her Medicare billings from zero to $11.6 million in one year; federal agents shut down her clinic but did not charge her with a crime.
  • A high-school dropout, armed with only a laptop computer, submitted more than 140,000 bogus Medicare claims, collecting $105 million.
  • A health plan settled a Medicaid-fraud case in Florida for $138 million.
  • The giant hospital chain Columbia/HCA paid $1.7 billion in fines and pled guilty to more than a dozen felonies related to bribing doctors to help it tap Medicare funds and exaggerating the amount of care delivered to Medicare patients.
  • In New York, Medicaid spending on the human-growth hormone Serostim leapt from $7 million to $50 million in 2001; but it turned out that drug traffickers were getting the drug prescribed as a treatment for AIDS wasting syndrome, then selling it to bodybuilders.
  • And a study of ten states uncovered $27 million in Medicare payments to dead patients.

These anecdotes barely scratch the surface. Judging by official estimates, Medicare and Medicaid lose at least $87 billion per year to fraudulent and otherwise improper payments, and about 10.5 percent of Medicare spending and 8.4 percent of Medicaid spending was improper in 2009. Fraud experts say the official numbers are too low. “Loss rates due to fraud and abuse could be 10 percent, or 20 percent, or even 30 percent in some segments,” explained Malcolm Sparrow, a mathematician, Harvard professor, and former police inspector, in congressional testimony. “The overpayment-rate studies the government has relied on . . . have been sadly lacking in rigor, and have therefore produced comfortingly low and quite misleading estimates.” In 2005, the New York Times reported that “James Mehmet, who retired in 2001 as chief state investigator of Medicaid fraud and abuse in New York City, said he and his colleagues believed that at least 10 percent of state Medicaid dollars were spent on fraudulent claims, while 20 or 30 percent more were siphoned off by what they termed abuse, meaning unnecessary spending that might not be criminal.” And even these experts ignore other, perfectly legal ways of exploiting Medicare and Medicaid, such as when a senior hides and otherwise adjusts his finances so as to appear eligible for Medicaid, or when a state abuses the fact that the federal government matches state Medicaid outlays.

Government watchdogs are well aware of the problem. Every year since 1990, the U.S. Government Accountability Office has released a list of federal programs it considers at a high risk for fraud. Medicare appeared on the very first list and has remained there for 22 straight years. Medicaid assumed its perch eight years ago.

There’s more at the link. Bullet point format is my emphasis.

Go read the whole thing . . . and add it to the list of reasons why our present entitlement programs simply can’t go on being funded as they are. $87 billion every year in fraudulent and/or improper expenditure??? That’s our tax dollars at work!



  1. And there it is.

    The $100 billion that the government is trying to trim.

    It's all better now, right?

    Just round them up, S&P will AAA us again, and poodles will rain from the heavens…

    Sorry, too much sarcasm this late at night is never good.

  2. It can go the other way as well. I know of a case where someone spent about $5.00 extra for shipping on a Sat. ("Five": not five hundred or five thousand)

    I'm not sure how much was spent "correcting" this "excess" payment, but there have been at least three meetings to discuss this issue.

  3. That's more then the supposed cuts, and yet no congressman seems to want to champion reducing the fraud. I'd call that proof of will abuse by our so called leaders.

  4. Next, add in all the abuse of various assistance and welfare programs. Check out the video linked here – but be sure to take your blood pressure medicine first:


    You know this one moron is merely a representative of a HUGE group just like him. How many more billions are being wasted throughout the US? And I make no distinction between "statue" and "federal" money, as so much state money comes from the federal government…meaning, us, the few productive citizens left in the country.

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