The Lackluster Record of Government-Run Health Care

Published: Mar 18, 2010

Author: Array

Before the Democrats who control Congress push through a trillion-dollar expansion of government-run health care, they might want to know the facts about how efficiently the government has handled health care in the past, and how much bigger the government will grow once the bill becomes law.

When all is said and done, President Obama’s plan mandates dozens of new entitlement programs and creates scores of new government offices, bureaus, commissions, and programs, all of which will have to be funded, staffed and managed at taxpayer cost.

Moreover, an expansion of the federal bureaucracy at that rate will greatly increase the incidence of waste, fraud and abuse in health care. Already Medicare, which accounts for 14% of all federal spending, is rife with waste, fraud and abuse. Even Attorney General Eric Holder has said, “By all accounts, every year we lose tens of billions of dollars in Medicare and Medicaid funds to fraud.”

A recent analysis by the Government Accountability Office (GAO) estimated that federal subsidy programs cost taxpayers about $100 billion every year in improper payments, with Medicare and Medicaid accounting for more than half of that. Harvard Professor Malcolm Sparrow, a specialist in health care fraud teaching at the Kennedy School of Government, has estimated that as much as 20% of the federal health program budgets – or approximately $150 billion – is eaten up by improper payments every year.

No budget gimmick can hide that kind of wasteful spending from the American people, and no expansion of the government’s role in health care can mitigate the systemic problems that already exist.

This week, House Speaker Nancy Pelosi told reporters – and her undecided Democratic colleagues – that the bulk of the cost for the president’s plan will come from recovering wasteful spending in Medicare and Medicaid, an amount she projects will add up to $500 billion over the next several years.

Such assurances are disingenuous, however, in light of the evidence. In 2008, for instance, the Department of Justice recovered a meager $1.48 billion from Medicare and Medicaid fraud through enforcement programs that cost taxpayers $1.13 billion. Once these enforcement costs are subtracted, the government only recovered $350 million. At that rate, it would take the Justice Department more than 1,400 years to recover enough to pay for the president’s plan.

Government-run health care also runs much higher administrative costs per insured person than private insurance does. Using numbers from the Department of Health and Human Services (HHS), the wastefulness of bureaucratically-managed health care becomes staggering.

Each year, the government spends an average of $927 in administrative costs per person for Medicaid and $509 for Medicare. Private insurance, on the other hand, costs only $453 per person in administrative costs. Until the government can demonstrate an ability to get administrative costs under control for programs that it already runs, Americans should vehemently oppose any effort to give bureaucrats in Washington any more power to control the one-sixth of the U.S. economy that affects health care.

Republicans have long urged that the Democratic majority tackle issues such as waste, fraud and abuse in the government-run health care programs that already exist before undertaking any expansion of federal health programs or other large-scale health care overhaul. Remedying these problems will save taxpayer dollars and slow the rate of rising health care costs. However, Democrats have been quick to reject any solutions brought to the table by Republicans, including medical malpractice reform and tighter controls on waste, fraud and abuse. .

The taxpayers are not deceived. They know that the government’s track record in managing healthcare has proven less efficient and more expensive than private insurance. They know that the President’s plan is a recipe for more waste, fraud, and abuse.

And they have sent consistent messages both in the polls and at the polling places that they do not support a scheme for bigger government with more control over their lives. Regrettably, the Democratic leadership in Congress is more concerned about giving the president a legislative win than they are about giving the American people the kind of responsible reforms they want.

Rep. Darrell Issa, R-CA, is the ranking minority member of the House Committee on Oversight and Government Reform.