Mike the Mad Biologist

In the battle of ideas, what things are called matters (e.g., the ‘death tax’ instead of the estate tax). So I’m utterly puzzled as to why Paul Krugman is calling the current state of play in healthcare centrist:

The fact is that the Senate bill is a centrist document, which moderate Republicans should find entirely acceptable. In fact, it’s very similar to the plan Mitt Romney introduced in Massachusetts just a few years ago.

This is not a centrist bill. After one considers everything that those left-of-center bargained away, it’s hard to see how this bill could be any farther to the right (italics mine):

George Bush could have proposed the Senate health bill. If he had, those Republicans who now loathe the measure would be at the barricades defending it. And those Democrats who backed Obama-care for the past year would have been hoisting their pitchforks and demanding its demise….

The changes: Insurance companies would have to offer coverage to all, regardless of pre-existing conditions; everyone would have to obtain basic coverage or pay a penalty; exchanges would enhance the individual insurance market; the government would subsidize premiums for those who cannot afford them, including both individuals and small businesses; and Congress would take some small steps to slow the growth of health costs.

None of these ideas are new and most used to sit comfortably in the GOP mainstream. The Senate bill mimics the framework of the 2006 Massachusetts health reform, an idea that was pushed by Republican then-Governor Mitt Romney and, as we know by now, was supported by new Massachusetts Senator Scott Brown. This is what Romney said about the bill after it passed: “Every uninsured citizen in Massachusetts will soon have affordable health insurance and the costs of health care will be reduced.” Sound familiar?

…And the Massachusetts plan was not just Romney’s idea. Staffers at the conservative Heritage Foundation provided extensive technical guidance, and the broad outlines (if not all the details) were widely praised by the right–at least until the 2008 presidential campaign, when Romney denied parentage of his own reform bill.

The fucking Heritage Foundation is not centrist. Not even close.

Look, the leftist solution is socialized medicine (the British solution). The liberal solution is single payer. The centrist solution is Medicare-for-all or a strong public option–the ability to buy into a government-run health insurance plan. This is a conservative plan–and if MA is any guide, it’s not affordable.

But this isn’t just about the correct political taxonomy. Centrist should have a meaning that implies that a broad swathe of the country supports something. Despite months of a one-sided propaganda ~~campaign~~ massacre, Medicare-for-all/public option still has majority support. It is the center.

‘Progressives’ need to stop calling conservative programs centrist, when they’re not. It’s not helping, it’s hurting.

Comments

#1 Kathy Orlinsky
January 25, 2010

I agree that terminology matters, and we’ve allowed the far right to set the terms from the start. Right after Obama’s election by 52% of the country, the pundits were cautioning him to remember that we live in a center-right country. Say what? You could make an argument that we’re more to the right now than we were then, based on recent elections. But we are not now and certainly were not then center-right.
#2 JasonTD
January 25, 2010

Mike,

The part you left out of that Howard Gleckman’s post is fairly important.The second paragraph reads,

Leave aside the million details that are grist for the Washington policy mill and think for a minute about the framework of this bill. As I’ve written before, it is pretty simple and not very radical. At its core is a health system that relies on employer-based private insurance to cover most working people. The old would continue to be insured by Medicare and the poor would be covered by Medicaid, just as they are today.

In one sense, he’s right. The Senate bill is not a radical re-imagining of the health care system in the U.S. What it does do, however, is expand coverage largely through new government spending and new taxes to pay for that spending. Maybe more government spending is the only way to increase coverage for most of those that don’t have insurance now, I don’t know. But it is hardly a conservative plan to greatly expand entitlement spending.

The truly conservative proposals I’ve heard involve increasing competition by allowing people to purchase insurance across state lines or reworking things to give consumers better price signals in how they use their health care. The latter could be done by helping to expand the use of HSA’s or insurance plans that give people incentives for leading healthier lifestyles, for instance.

I do tend toward the conservative side on issues like this, because I believe that an individual’s freedom of choice and responsibilty are as important as the common good. But most of all, I want to see government be effective and actually deliver good, functioning plans. I could even accept a single payer overhaul of health care if I could be convinced that most people would see a net benefit to their health care access and quality. I opposed the Senate and House bills on that basis; they didn’t look at all, in my opinion, to be well thought out or effective at what they promised.

By the way, I’ve seen liberals/progressives talk about a “strong” public option. What about a specific public option plan would make it “strong”? That’s just something that has me curious.
#3 JonH
January 25, 2010

I like what you said in this article and the various references you had in blue that I could study. Many concervatives don’t realize that R. Reagan’s baby IS the Heritage Foundation. When they helped Romney with many of the details of the MA HC plan, there were two things that I recall that stand out… from “back then” when it was developed.

1). It was a federalist based plan = for states (not federal gov). States can more easily back up from mistakes than Fed Gov. It was to be a first experiment that numerous states could develope other approaches from.

2). The rumor at the time MA HC plan was developed was there needed to be something “private sector” based to run interferance with the “anticipated” Hillarycare (federal based), single payer plan. Guys like Romney and the Heritage Foundation didn’t want the private healthcare sector destroyed. Remember how Reagan used to say he wanted to allow the American people “to do what they do best”–that meant we do small and large businesss and that’s what we do best.

Lastly, I still can’t find the alleged quote that Romney ever said healthcare costs would be reduced through the MA plan. I keep hearing people say it over and over–but like you, there ARE NO REFERENCES–BLUE or otherwise. It just sounds like more false Romney utterances that he never said or did. There are tons of those out there.
#4 Mike the Mad Biologist
January 25, 2010

JonH,

The quote is from a WSJ op-ed that Romney wrote in 2006.

Jason,

By ‘strong public option’, I mean (and most others who use the phrase) that it is available to everyone. Right now, the public option, if it makes it, would only be available to a very limited number of people (probably 3-4 million). That’s not a good competitive system at all.
#5 Tyler DiPietro
January 25, 2010

“A message to House Democrats: This is your moment of truth. You can do the right thing and pass the Senate health care bill. Or you can look for an easy way out, make excuses and fail the test of history.”

A message to the Krugster: Fuck you. The only people failing the test of history are those endorsing this corporate giveaway and trying to emotionally blackmail everyone else into doing the same.
#6 Troublesome Frog
January 26, 2010

centrist legislation: (n) Any legislation I would like to see passed, with or without the support of my political opponents.
#7 JasonTD
January 26, 2010

Mike,

Thanks for the clarification. I certainly agree that if there was to be a public option, that it should be available to everyone. It makes no sense to limit it. In what way was the House version limiting access to the public option? If it was mostly available to those that private insurers wouldn’t want as customers anyway, then it certainly wouldn’t increase competition, just as you said. It would also then be a very expensive program to run.

That’s my concern with a public option in general. If it truly operates on a ‘level playing field’ with private insurance, then it is hard for me to see how it would actually improve competition, except in the states that only have a couple of insurers operating. On the other hand, if it has an edge in competitiveness beyond being not for profit, either through government funding or favorable regulation, then all it will do is eventually give itself a monopoly. (The latter situation is what the right-wing and Democrats in the pockets of the insurance industry think that liberal Democrats really want, hence opposition to the public option.)

I guess it is just that I haven’t read much about how proponents envision the public option to actually work. How it would be funded initially, how it would be funded once in place, what rules would it operate under (since every state has its own set of requirements for coverage), etc. I also am curious what progressives think about things like expanding HSAs or buying insurance across state lines. What are the arguments against those proposals? Personally, I would have loved to have been able to contribute to an HSA while I was younger and didn’t use health care as much as I do now. Even now, it would be nice to continue to save up money for things like braces that I never got when a kid, or simply to have that money available for out of pocket expenses like co-pays and deductibles that are tough on my budget right now.
#8 BaldApe
January 26, 2010

ISTM that the problem with the Ma health care plan is the same problem with my attempt at establishing a family budget. As my father told me, you can’t have one person in a family on a budget.

And you can’t control national health costs one state at a time. The only way to control health care costs is for large enough groups to have the power to negotiate lower costs.

One of the serious problems with the current system is exemplified by what happens in the doctor’s office my wife works in. I don’t want to be too specific, but they are specialists who sell certain medical appliances to patients who need them. The patients are almost all covered by Medicare, or at least some kind of insurance. The appliances are (say) $300, and the supplies that go with them are (say) $150 for a years worth.

A patient who did not have insurance had to buy one of the appliances. It turned out that the retail price of the appliance was about half of what they were billing insurance, including Medicare, and the supplies were about a quarter of what they were billing.
#9 Jesse
January 26, 2010

JasonTD–

You are making a few assumptions about health care competition that are not necessarily so.

First: price is the only way to compete. Many countries — Switzerland, The Netherlands, and Germany in particular — have private insurers doing the bulk of the work. But they are under very strict price controls, so to compete you have to compete on service and by definition, efficiency. A strong public option is one that keeps the insurance industry honest, as it were. If we take the position that government systems are always less efficient and provide crappier service (not necessarily so, the overhead on Medicare is smaller than any insurance company) then a public option wouldn’t be able to compete with private plans anyway.

Second: that health care works like other goods. It doesn’t. When I buy shoes, I can check out different prices, and shop around. I can see what is important to me and go from there. Do I want leather or sneakers? That kind of thing. But health care isn’t like that. You need it to live. So I can’t shop around if I have cancer. I only get one chance. I can’t shop around if I have a broken leg. The amount of information the consumer has is so miniscule, and the seller has essentially infinite pricing power. So you can’t really let “the market” work here, or rather, a market can’t really function. Not if you want to get treated when you go the ER and not have people go bankrupt whenever they get sick. And contrary to Libertarian dogma, you just can’t control a large chunk of your health. The guy who jogs every day and eats the healthiest diet anywhere can still get hit by a bus or get cancer or be next to a guy who sneezes on him and gives him TB.

Another issue (related to public plans) is that health care is actually more efficient if people overuse the system. How many diseases do you know that are better treated later than earlier? So if everyone went to a doctor too often, but caught loads of stuff like cancer or TB early, it would actually be cheaper for the system as a whole. But private markets don’t operate on this premise. They operate on the premise that you want people to use the system less. It costs nothing to give a hypochondriac sugar pills, if necessary. (Well, the time for the visit).

(TB, for instance, costs $1 to treat if caught early, by the time you have visible symptoms it is $1,000 and if you are in the ER it is $10,000 at least. If you live).

Frankly, I would have been happy if they just expanded Medicare — even if you pushed it down to the 55+ crowd that would be a gigantic savings to the system as a whole since younger people are healthier generally.

This is the problem with a market-based insurance system. The incentive is to get healthy people in the plan and not pay. Insurance companies make no money when you are sick. There is no incentive for any kind of preventative care– when you charge for doc visits, you actually discourage people from doing just that.

And to the issue of “rationing” care: we do that now. It’s according to how much money you have. If you have no money and need, say, heart surgery, tough luck. You die. (Medicare/Medicaid does some of this, but not nearly enough to cover everyone).

The other issue is that in most other nations medical education is free or nearly so. That makes a gigantic difference in cost structure, incentives, etc.

As to HSAs: they are woefully inadequate and can’t really help much. If you knew your health expenses year to year it makes sense, but you don’t. Can you predict with any certainty when your kid will get pneumonia or the flu and how bad it will be? No. Nor can you predict whether you will be hit by a bus. I was in the hospital back in 1983 in a motorcycle accident. The bill was $13,000 (1983) dollars. That was something like a third of my parents’ income at the time. How do you plan for that? You can’t. The whole premise of HSAs is that if you save enough you can cove your health costs. True to a point, but what if you have diabetes? Insulin is not cheap. Medical care is expensive stuff. Really, really rich people can save enough to cover something big (or even not so big). I have to eat and pay rent.

The current health bill is a tinkering. The best thing I can say about it is it gives us the concept of universality. But that is about it.
#10 JonH
January 26, 2010

Mike,

Thanks for the information as to where Gov Romney said, “…and the costs of health care will be reduced”.

I appreciate your accuracy!!! You’re not mad, but may be angry.

With the explosion of knowledge continually being expanded, and while more and more scientific minds seek to find cures for illnesses there will be no end to increased healthcare costs. As long as patients and medical practioners want to increase their chances for a better cure or increased survival rates, research costs will push medical expenses up for ever. I’d hate to see the search for better cures and survival rates stopped by a governmental cost cap.
#11 JasonTD
January 26, 2010

Jesse,

Many countries — Switzerland, The Netherlands, and Germany in particular — have private insurers doing the bulk of the work. But they are under very strict price controls, so to compete you have to compete on service and by definition, efficiency.

These businesses have to compete for customers. Efficiency would affect what level of service a company would be able to offer and still maintain a high enough profit to attract investors, but it would be the service alone that would distinguish the companies from each other as far as a consumer would be able to see with strict price controls like that. Without price controls, then consumers decide based on a combination of price and service. Private industry thus has an incentive to be efficient in either situation. Government has much less incentive to be efficient and those incentives have little to do with the actual user of the government service. The push for efficiency in a government program depends on the level of funding available, which is a matter of politics rather than the usual economic forces.

If we take the position that government systems are always less efficient and provide crappier service (not necessarily so, the overhead on Medicare is smaller than any insurance company) then a public option wouldn’t be able to compete with private plans anyway.

The ‘overhead’ on Medicare is lower in a large part because private insurers need to have underwriting. (It should also be noted that Medicare and Medicaid have huge rates of fraud because so few claims are audited and because they have a fairly easy claims process.) When insurers are banned from using underwriting to set higher premiums or deny coverage for people with higher risk it is called ‘community rating’ and ‘guaranteed issue’, respectively. (I found and read an excellent introduction to community rating at this NY Times blog site, with a follow up here.) The risk then becomes a factor of the entire market, rather than individuals. This results in people that may currently be paying relatively low premiums to end up paying more once community rating is implemented.

The problem with community rating is a matter of perception. Sense we, as a country, have not come to a consensus on what social contract we should have in regards to health care, many Americans see community rating as inherently unfair. Personally, I have mixed feelings about it.

You do have a point in that people can’t really comparision shop who is going to set your broken arm for the lowest price.

Another issue (related to public plans) is that health care is actually more efficient if people overuse the system.

I have to strongly disagree with your arguments here. To really make that argument work, you need to get into the details of how many tests and doctors visits does it take to find the diseases or risk factors for disease early. This is why that whole thing about the mammogram recommendations being for those women 50 or over vs. 40 or over got in the news. You seem to be arguing that if a yearly mammogram at 40+ is good, a yearly mammogram at 30+ is better. From the point of view of catching breast cancer sooner, that makes sense. But in terms of straight economic analysis, you have to factor in the costs of doing all those mammograms. I.e. how many women 30-39 have to be tested to diagnose one instance of cancer sooner than self-exams and/or routine doctor visits would find it? So, overusing medical testing can be highly inefficient, from a cost-benefit point of view.

Lastly, you seem to misunderstand how HSAs work. You get an HSA in conjunction with a high-deductible insurance plan (I think the minimum deductible for it to qualify to go along with an HSA is $1500). The insurance would still cover you like any other plan in case of accident, illness, or even treatments for chronic diseases, but just with a higher deductible. So, it might not be a good option for someone that already has a pre-existing condition that requires ongoing expenses. But it could be a good option for the young and healthy, as they’d still have the safety net to avoid huge costs, and they could save against the out-of-pocket costs for the future with extra money that they’ll have because of lower premiums. And they could save in addition to that if they choose to in a tax free way. Money you contribute to the HSA is taken out before taxes, and you don’t pay taxes on money you take out of the account to pay for medical expenses.
#12 Jesse
January 27, 2010

Jason–

Yes, certain tests cost money, but I am arguing that the cost of that is offset by the gain over time. You can argue about individual types of tests, but the point is that in systems where going to the doc is no big deal (and essentially cost-free to the consumer) the results overall are pretty good.

Think of this: every other system — bar none– that relies on cost controls and competition for customers or single-payer — or some combination — does better than the US on just about every health measure you can think of. Life expectancy? Check, we’re near the bottom of industrialized nations. Infant mortality? Check, we’re just about last. Morbidity and mortality? Pick a disease, and we rate pretty poorly. Productivity loss? Depends on how you measure it — Americans get fewer sick days — but when you think of how many Americans wait until they really can’t come to work, plainly the system is messed up.

We pay more and get less than anywhere else. And that is with the NIH funding hundreds of millions in drug research, and a ton of public funding into medical research. I mean, you’re talking about efficiency in the most inefficient system on earth.

If insurance companies had to compete for customers under price controls, I would say they have a big incentive to be efficient in providing the service, at the very least. Right now the incentive in the US is

1. not to pay
2. employ loads of people to prevent payment — that is their job (to make sure the insurance company pays as little as possible) the hassle you have every time you call them is not an accident — it’s profit. Putting you on hold in the hope you will give up costs the insurance company very little compared to paying out. Insurance companies in the US are very efficient in one sense — not paying.

In Switzerland, to stay in business, the incentive is reversed — since they have to compete for customers, and won’t get them if they hassle people, your incentive is to streamline payment and reduce hassle time. Remember they have to make money, and the revenue per person is fixed. If they don’t pay out, then I can go to someone who will. That isn’t the case here in the US because there is no competition and no information to make that work in any case. The whole employer-based system sets things up so that individual plans are hugely expensive.

I do understand how HSAs work, which is why I don’t think they will help. Again, the gigantic deductibles are not an incentive to not get sick. They just mean that when you need it you’re less likely to be able to pay for treatment, which strikes me as sort ‘a nuts.

As it is, we have a system that encourages the most expensive possible ways of treating anybody.

I’d be happy with insurance companies operating over state lines and getting rid of the antitrust exemption, by the way. That would help.

Is there fraud in Medicare? Hell yes. There is also insurance fraud. But it isn’t like Medicare fraud is some gigantic cost to the system, anymore than it is to other insurance companies, or there’s some big incentive (any more than anywhere else) to commit fraud. A Medicare fraud case has to be $10 million at least before it’s more than a rounding error at say, UnitedHealth.

You’re assuming there is no incentive to go after fraudsters, but why should that be? The government goes after other crimes without making a penny off it. Saying there is no incentive to go after Medicare fraud because it isn’t a for-profit company is like saying the IRS has no incentive to go after tax cheats or the police have no incentive to investigate bank robbery.
#13 JasonTD
January 27, 2010

Jesse,

I am going to remain skeptical that more use of preventative medicine will reduce overall medical spending until there’s detailed studies to prove it. I absolutely agree that the health outcomes of people will be better overall under a universal coverage system where people have better access to doctors and thus to medical testing. That, in itself, is a more than reasonable argument for universality. But there are far too many factors that go into the cost analysis to simply accept your argument about costs just because it sounds good.

I’ll have more later, but I need to get back to work now.
#14 JasonTD
January 28, 2010

Continuing with the health rankings issue . . .

I work in public education where we have a similar problem in terms of how we rate compared to other developed countries. But test scores alone don’t say exactly what is wrong with our education system. Is it differences in curriculum? Method of instruction? Quality of teachers? Parent involvement? School environment? Resources available? I could go on. My point is that it’s not enough to say that we spend more and get less in order to advocate a specific path of reform. How health care is paid for is likely to be one of many factors that affect the overall health statistics of a country.

I’ll say again, that a universal system here would certainly improve access for those that currently don’t have coverage and thus improve their health. In proposing a specific plan to achieve universality, however, you have to consider what that plan will do to other factors that affect the health of the population.

Problem 1 … we probably don’t have enough doctors to go around if we were to add the tens of millions without coverage now to the system. That would likely lead to longer wait times for everyone in the system to get treatment. It isn’t even just a matter of too many doctors going into specialties rather than primary care; I recall reading an article that did a quick analysis of the capacity of our medical schools and concluded that it is inadequate to replace retiring doctors over the next couple of decades, let alone expand the total supply.

Problem 2 … The House and Senate bills expand coverage for millions by increasing Medicaid eligibility. Medicaid typically pays doctors and hospitals considerably less than private insurers do. I think that a big part of government subsidies to health care providers is to cover part of this difference, but it doesn’t cover it all. Not every doctor will take Medicaid patients (or Medicare patients, which also earn them less), and when they do, they end up negotiating higher payments from private insurers to make up the difference, raising premiums for everyone else. (A budgetary issue with expanding Medicaid is that it increases the burden for state governments as well. This is what the ‘Nebraska Compromise’ was all about, though to be fair to Ben Nelson, a couple other Senators got similar deals for their states.)

Problem 3 … Another concern is what the health reform proposals will do to research and development of new treatments. Part of the revenue to pay for it is through taxes on medical technology companies. Singling them out for an extra tax beyond ordinary business taxes doesn’t make sense to me. It may seem fair to impose a ‘windfall profits’ tax on a company, but it is hard to say how much those windfall profits are driving medical innovation in the first place, so we may lose some private R&D spending if we go that route.

I’m sure there’s even more things to consider that I didn’t cover. Again, time to get to work (busy this week). I’ll address your arguments about the insurance industry later. Thanks for the good discussion.
#15 JasonTD
January 28, 2010

Regarding insurance companies incentives to not pay claims …

I don’t see why that would be any less true for private insurers in Switzerland than in the U.S. The less you pay out in claims compared to what you take in as premiums, the more money you make. Now, maybe the price controls in Switzerland account for that and the formulas that determine premiums shift the price of premiums based on how much is paid out in claims. In a way, this would guarantee the company a certain level of profit. If that’s how it works over there and that’s your point, I can concede that.

In Switzerland, to stay in business, the incentive is reversed — since they have to compete for customers, and won’t get them if they hassle people, your incentive is to streamline payment and reduce hassle time. Remember they have to make money, and the revenue per person is fixed. If they don’t pay out, then I can go to someone who will. That isn’t the case here in the US because there is no competition and no information to make that work in any case. The whole employer-based system sets things up so that individual plans are hugely expensive.

Competition may be limited in some states, but it is not correct to say that there isn’t any competition. Also, I’m not sure what you mean when you say that there isn’t any information to make ‘that’ work. Do you mean that there isn’t information on which companies offer better service and less hassle with paying claims? I’ve never personally tried comparing health insurance companies on that basis, since I’ve always had employer-based plans, but I’d be surprised if there weren’t all sorts of consumer advocate organizations that track that kind of information here in the U.S.

Employer-based coverage is a problem, for sure. That actually brings up an interesting point from earlier. A lot of conservatives have complained that community rating drives up premiums (according to their arguments), but that is exactly how employer-based coverage works. It doesn’t matter if someone is a 25 year-old nonsmoker with a ‘fit’ BMI or a 55 year-old recovering alchoholic diabetic smoker with a BMI that puts them at ‘morbidly obese’ who has already had a heart attack and a quadruple bypass. Both of them would cost their employer the same premiums. That is what is referred to as ‘pure’ community rating.

So, I think I’ve come around on the idea of community rating. The strongly individualistic conservatives might not think its fair, but if done right, I think it is. If we allow insurers to offer incentives for healthy lifestyle choices (non smokers, people that exercise regularly, etc.) and go with a small spread in premiums based on demographics like age (some states that have community rating allow that), then that will improve access for the people that have a hard time getting it due to health history. It will spread the risk around more evenly and probably improve the overall health of the country. Couple that with the ability to purchase insurance from any state (while eliminating the anti-trust exemption as you pointed out), and then competition between insurers will increase as well and expand risk pools.

Regarding fraud …

I’ve never seen any articles that compare Medicare/Medicaid fraud rates to private insurance fraud rates, but I do know that fraud is huge in the government programs. Just google for Medicare fraud and skim through a couple of articles in popular media, and you’ll find that some estimates put Medicare fraud at over 10% of total Medicare spending. I don’t see a private company letting that happen, especially when the profit margins on health insurance aren’t that great, percentage-wise. They make big profits by simply handling huge amounts of money total.

You’re assuming there is no incentive to go after fraudsters, but why should that be? The government goes after other crimes without making a penny off it. Saying there is no incentive to go after Medicare fraud because it isn’t a for-profit company is like saying the IRS has no incentive to go after tax cheats or the police have no incentive to investigate bank robbery.

The police investigate crimes because voters demand it. Thus, how much effort is expended on law enforcement is a matter of politics. People are acutely aware of how severe crime is in their neighborhood, and they will quickly demand action from their political leaders if it is higher than they can accept. There isn’t a big push to crack down on Medicare fraud because it isn’t something that affects the average person directly. How do you see it if a relatively small fraction of your federal taxes end up in the pocket of some criminal? Given everything the government spends money on, it might be unnoticable.

The high side of Medicare fraud estimates I’ve read is $60 billion annually. Eliminating that would pay for almost half of the Senate bill. Criminals are inventive, if nothing else, so there will always be some fraud, but how much money could we save by even doubling the current efforts to combat it?
#16 Centillion
January 28, 2010

You’re assuming there is no incentive to go after fraudsters, but why should that be? The government goes after other crimes without making a penny off it. Saying there is no incentive to go after Medicare fraud because it isn’t a for-profit company is like saying the IRS has no incentive to go after tax cheats or the police have no incentive to investigate bank robbery.

The police investigate crimes because voters demand it. Thus, how much effort is expended on law enforcement is a matter of politics. People are acutely aware of how severe crime is in their neighborhood, and they will quickly demand action from their political leaders if it is higher than they can accept. There isn’t a big push to crack down on Medicare fraud because it isn’t something that affects the average person directly. How do you see it if a relatively small fraction of your federal taxes end up in the pocket of some? Given everything the government spends money on, it might be unnoticable.

Good grief, you didn’t even try to answer his point.

Everything you said about Medicare fraud applies equally to tax fraud, so by your logic no-one has any incentive to investigate tax fraud. Do you have an explanation of just how the two are are different, or not? If not, does that not suggest the presence of a flaw in your reasoning somewhere? Or are you claiming that no-one investigates tax fraud, either?
#17 JasonTD
January 28, 2010

It isn’t that there is no incentive to investigate tax and Medicare fraud, just that it is much less than for the political incentive to investigate crimes where individual citizens are the victims. Just by the very fact that Medicare fraud has been a serious problem for decades is enough to show that there isn’t enough incentive to investigate it thoroughly. (Google searches on medicare fraud I’ve done in the past have turned up articles about politicians talking about clamping down on it going back to the ’90s.) If the high end estimates are correct in that it could be $60 billion a year (more than 10% of all Medicare spending), that is ludicrous, in my opinion. I don’t know off hand what tax fraud rates are like, but if they are comparatively low, then perhaps the Medicare administration can learn something from the IRS.

I feel that I did address his point, though perhaps not as well as I just did with this clarification. His argument that you included in your post actually argued against something I never said anyway.

The ‘overhead’ on Medicare is lower in a large part because private insurers need to have underwriting. (It should also be noted that Medicare and Medicaid have huge rates of fraud because so few claims are audited and because they have a fairly easy claims process.)

That’s the statement I made regarding Medicare fraud before his he made his comment. So, you can see that I never said that there was no incentive to go after Medicare fraud. I just pointed out the fact that audits of claims are relatively low and that the claims process is fairly easy, hence large rates of fraud. I can only conclude that the incentive to investigate it or prevent it must be low or fraud rates wouldn’t be so high.