Today in Washington D. C. - Oct 26, 2009 - Media Call's Gov't Plan A "Mirage" & Examines Medicare Fraud

The Senate reconvenes at 2 PM today. The next votes will be on Tuesday, when the Senate will take up another district judge nomination, Irene Berger for Southern District of Vest Virginia, and vote cloture on the motion to proceed to a bill to extend unemployment insurance, H.R. 3548.

As Sen. Harry Reid enters the second week of closed-door negotiations to cobble together a bastardized new health care reform bill, the Left continues to demand that it include a government-run insurance plan. This was a bad idea when it was floated earlier this year and it remains so. Today, this is acknowledged by writers for The Washington Post who relate that the program it’s supposed to emulate, Medicare, which is hardly a model for efficiency.

Robert J. Samuelson observes, “In reality, the public plan, also known as the public option, is mostly an exercise in political avoidance: It pretends to control costs and improve access to quality care when it doesn't. . . . The public plan's low costs would be artificial. Its main advantage would be the congressionally mandated requirement that hospitals and doctors be reimbursed at rates at or near Medicare's. These are as much as 30 percent lower than rates paid by private insurers, says the health-care consulting firm Lewin Group. With such savings, the public plan could charge much lower premiums and attract lots of customers. But health costs wouldn't subside; hospitals and doctors would offset the public plan's artificially low reimbursements by raising fees to private insurers, as already occurs with Medicare. Premiums would increase because private insurers must cover costs to survive.”

Meanwhile, Fred Hiatt, the editorial page editor for The Washington Post (and hardly a conservative fellow-traveler) explores  in an op-ed today the political and practical consequences of a government insurance plan like the ones being designed by Democrats. Hiatt writes that such a plan “allows Democrats to make their base happy, to bash the unlovable insurance companies -- and to claim to be taking care of cost control, too, by ensuring competition in the marketplace. . . . . [I]f, as seems likeliest -- and as House legislation mandates -- the plan uses government power to demand lower prices from hospitals and drug companies, those providers may lower quality or seek to make up the difference from private payers. Private companies would have to raise their rates, so more people would choose the public plan, so private rates would rise further -- and we could end up with only the public option and no competition at all.”

Liberals and some Democrats have recently been touting a government plan by trying to claim it will be like Medicare, with some going so far as to deem it “Medicare Part E.”  Samuelson explains, “The promise of the public plan is a mirage. Its political brilliance is to use free-market rhetoric (more ‘choice’ and ‘competition’) to expand government power. But why would a plan tied to Medicare control health spending, when Medicare hasn't? From 1970 to 2007, Medicare spending per beneficiary rose 9.2 percent annually compared to the 10.4 percent of private insurers -- and the small difference partly reflects cost shifting.”

And then, of course, there is the fraud. President Obama and others have acknowledged the existence of “waste, fraud, and abuse,” but an investigation by “60 Minutes” for CBS is truly stunning: “[Medicare] provides a rich and steady income stream for criminals who are constantly finding new ways to steal a sizable chunk of the half trillion dollars that are paid out each year in Medicare benefits. In fact, Medicare fraud - estimated now to total about $60 billion a year - has become one of, if not the most profitable, crimes in America.” Asked by correspondent Steve Kroft if “the Medicare fraud business bigger than the drug business in Miami now,” top Justice Department prosecutor Kirk Ogrosky responded, “I think it's way bigger.”

Kroft interviewed a man who was busted by the FBI for Medicare fraud and discovered that fraudsters set up multiple fake companies to bill Medicare for non-existent services. “Once the crooked companies get hold of the patient lists, usually stolen from doctors' offices or hospitals, they begin running up all sorts of outlandish charges and submit them to Medicare for payment, knowing full well that the agency is required by law to pay the claims within 15 to 30 days, and that it has only enough auditors to check a tiny fraction of the charges to see if they are legitimate.”

CBS writes, “Asked why it has taken Medicare so long to figure out they were being scammed, [Attorney General Eric] Holder told Kroft, ‘I think lack of resources probably. And then I think people I don't think necessarily thought that something as well intentioned as Medicare and Medicaid would necessarily attract fraudsters. But I think we have to understand that it certainly has.’”

These harsh realities say a lot about what a government-run insurance plan is likely to become over time and why it’s a bad idea and why there remains bipartisan opposition to it in Congress.

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