The Amazing Story of Medicare’s Low Administrative Costs

How is it that a government bureaucracy like Medicare can keep it’s administrative costs so much lower* than private health insurance? 

Today’s Washington Post may have the answer: “Medicare Pays Most Claims Without Review.”  That was the sub-head of an article on today’s front page.  The headline was, “Medical Fraud a Growing Problem.”

So, what kind of fraud are we talking about here?

All it took to bilk the federal government out of $105 million was a laptop computer.

From her Mediterranean-style townhouse, a high school dropout named Rita Campos Ramirez orchestrated what prosecutors call the largest health-care fraud by one person. Over nearly four years, she electronically submitted more than 140,000 Medicare claims for unnecessary equipment and services. She used the proceeds to finance big-ticket purchases, including two condominiums and a Mercedes-Benz

Law enforcement authorities estimate that health-care fraud costs taxpayers more than $60 billion each year.

Woah!  That’s a lotta coin!  How can it be so easy to bilk Medicare??

Health-care experts say the simplicity of Campos Ramirez’s scheme underscores the scope of the growing fraud problem and the need to devote more resources to theft prevention…

What’s that you say?  Not enough administrative resources dedicated to preventing fraud?

A critical aspect of the problem is that Medicare, the health program for the elderly and the disabled, automatically pays the vast majority of the bills it receives from companies that possess federally issued supplier numbers.

So Medicare’s approach to paying claims is not unlike, say, shoveling money out the door?

Officials who oversee the Medicare program say they are vigilant despite time pressure and limited resources. Employees review fewer than 5 percent of the nearly 1 billion claims filed each year…This year, CMS is working to finalize a rule that would prevent convicted felons from obtaining Medicare billing numbers.

But the important thing here is that Medicare is keeping administrative costs down, and passing the savings on to you, the taxpayer.

*Claim not valid in your state.  Or any state.

Compensating for Climate Change

Reason Roundtable has a discussion on whether developed countries should compensate developing countries for any damages from climate change. The following is from the introduction to the discussion:

Should companies or countries that have contributed to global warming be required to compensate individuals directly impacted by climate change? Is global warming a threat to private property? The latest Reason Roundtable examines these questions from a couple of perspectives.

Reason Foundation’s Shikha Dalmia says libertarians “cannot treat the earth’s thermostat as an enemy of freedom. Indeed, regardless of whether climate change eventually turns out to be real or not, the libertarian goal ought to be to ensure the protection and advancement of freedom — and all its attendant institutions: free markets, limited government and property rights.”

Jonathan Adler, professor of law at Case Western Reserve University School of Law, writes, “The whole point of protecting property rights is to ensure that property owners control exercise of their own rights. If a property owner wishes to accept another’s waste in return for compensation, that should be her choice. If not, then her right to refuse ought to be protected. Individual property rights should not be put up for a community vote or sacrificed as part of some utilitarian calculus. Libertarians readily accept this principle when government planners violate property rights in the name of economic development (think of the Supreme Court’s landmark eminent domain decision, Kelo v. New London). Yet they seem to abandon their commitment to property rights when it comes to global warming…. Given the potential impact of climate change on property rights, we ought to at least start thinking about policy measures that compensate affected parties without themselves posing a risk to individual liberty.”

Indur M. Goklany, author of the book The Improving State of the World: Why We’re Living Longer, Healthier, More Comfortable Lives on a Cleaner Planet, writes, “Not only is there no proven harm that can be specifically attributed to the warming, but, more importantly, even if there were such harm, a proper respect for property rights might preclude compensation…. If only some countries had contributed to global warming and benefited from causing it while others had neither contributed nor benefited from it, there might have been an argument for compensation from one to the other. But that’s far from the case. That every country is both a contributor and a beneficiary not only makes it infinitely more difficult to calculate who owes whom how much, it also vitiates anyone’s moral standing for compensation — a normative commitment to property rights notwithstanding.”

The Roundtable essays can be found in the following:

Global Warming: Keeping Property Rights at the Forefront
Looking for solutions that would least empower the government — and least threaten property rights
By Shikha Dalmia

Climate Change As If Property Rights Mattered
Individuals should be compensated by those whose actions create environmental problems that produce provable damages to their property
By Jonathan H. Adler

Climate Change: No Harm, No Claim
All countries have engaged in greenhouse-gas generating activities
By Indur Goklany

The School Choice Money Angle

The AP story on the New Orleans voucher program that just passed the state Senate illustrates something interesting that all school choice proponents should consider. Opponents of choice in Louisiana appear to be focusing on the financial angle, just as they have elsewhere (italics added):

Opponents point to recent improvements in New Orleans public schools that have been realized since the state and various charter organizations began running them after the hurricane. They say the $10 million would be better spent on public schools.

Opponents also said the cost is likely to balloon as the first-year students progress and more students enter the program. “When we get to the end how much is this program going to cost?” asked Sen. Joe McPherson, D-Woodworth.

The school choice community tends to focus on the human-interest, educational equity, side of things because it seems the most compelling and toughest angle to dismiss.

But we neglect the fiscal side of the equation at our peril. My doctoral research on school choice messaging suggests that emphasizing the financial argument for school choice – that it saves money – is the best way to increase support among the general public.

Most voters don’t have children, but almost all of them pay taxes. And in general, people think school choice reform will cost taxpayers a lot more than we already spend on education. Of course, that just isn’t the case.

School choice great way to save millions or even billions of dollars each year, and we all need to do more to make sure the public knows this fact.

A President Who Knew When to Cast Off the Neocons

I’m reminded that today is the anniversary of Ronald Reagan’s “tear down this wall” speech in Berlin:

It’s a useful reminder that while Reagan included key neoconservatives in his administration, particularly in his first term, most of them always suspected that he was a fool, incapable or unwilling to take the heels-dug-in position that would bring down our Soviet adversaries. Even in 1982, at the height of the neocons’ influence on Reagan and just five years before this speech, neocon capo Norman Podhoretz was accusing Reagan of “following a strategy of helping the Soviet Union stabilize its empire, rather than … encouraging the breakdown of that empire from within.”

I could bore you with umpteen more examples of these sorts of (neo-)conservative denunciations of Reagan, but the man knew an opportunity when he saw it, and wasn’t going to listen to the naysayers and pessimists when they told him it wasn’t so. Reagan by no means got everything right, but on the big questions, he would be a welcome respite from today’s Republican Party, which has been handed over to the neoconservatives in exchange for the mess of pottage that is our Iraq policy.

Louisiana Moving on School Choice

The Louisiana Senate passed a voucher program for New Orleans that looks set to become law soon. The House already passed the bill and Gov. Jindal is a strong supporter. Here’s more from the AP:

The plan would cover children in kindergarten through third grade in the 2008-09 school year, with subsequent grades added each year thereafter. Children from families earning up to 2.5 times the current federal poverty level (or about $53,000 for a family of four) would be eligible. If there are more applicants at a school than there are available seats, the school would choose participants randomly.

Although the bill is aimed at up to 1,500 students, backers say there may be only a few hundred slots available at private schools in the city next year.

It’s great that Gov. Jindal is pushing for more school choice in a state that sorely needs it, but his administration and state lawmakers should take a look at a more powerful and more popular way of promoting educational freedom; a broad-based program of personal-use and donation tax credits.

The small tax deduction passed earlier this year was a great first step, but Jindal can and should think much bigger on education tax credits.

Boumediene Ruling

The Supreme Court issued a very important ruling regarding the “Great Writ” of habeas corpus today.

Lengthy ruling … which I’m still studying, but the key line thus far is this: “The test for determining the scope of this [habeas] provision must not be subject to manipulation by those whose power it is designed to restrain.” George W. Bush and his lawyers purposely kept prisoners off of U.S. soil and argued that habeas was not available to non-citizens beyond U.S. territory (Gitmo).  Today, the Supreme Court rejected that claim.

More here and here.