Why thieves love America’s health-care system ... INVESTIGATORS in New York were looking for health-care fraud hot-spots. Agents suggested Oceana, a cluster of luxury condos in Brighton Beach. The 865-unit complex had a garage full of Porsches and Aston Martins—and 500 residents claiming Medicaid, which is meant for the poor and disabled. Though many claims had been filed legitimately, some looked iffy. Last August six residents were charged. Within weeks another 150 had stopped claiming assistance, says Robert Byrnes, one of the investigators. ... Health care is a tempting target for thieves. Medicaid doles out $415 billion a year; Medicare (a federal scheme for the elderly), nearly $600 billion. Total health spending in America is a massive $2.7 trillion, or 17% of GDP. No one knows for sure how much of that is embezzled, but in 2012 Donald Berwick, a former head of the Centres for Medicare and Medicaid Services (CMS), and Andrew Hackbarth of the RAND Corporation, estimated that fraud (and the extra rules and inspections required to fight it) added as much as $98 billion, or roughly 10%, to annual Medicare and Medicaid spending—and up to $272 billion across the entire health system.
The building that houses the Heritage Foundation, on Massachusetts Avenue near the Capitol, stands as an eight-story monument to plain-faced perversity. It was here, in 1989, that the intellectual framework was first developed for what would become the Affordable Care Act. And it is here where Needham has spent the last six years trying to exterminate what he sees as the Frankenstein’s Monster that Heritage inadvertently set loose upon the land. ... premiums have been rising because of a variety of structural reasons, and because federal assistance to recipients to offset the costs has been in many cases inadequate. ... it is also because unit costs have continued to soar — like the price of prescription drugs, thanks to the sweetheart deal that the pharmaceutical industry cut with the Democrats in exchange for being an early supporter of the law. Some rural states like Alaska have seen very little competition among insurers — something that a public option might have addressed, had the insurance lobby not spent a fortune to defeat that provision. ... To make Obamacare economically feasible for insurers, the program needed to attract a large pool of young and healthy recipients to offset the costs of providing care for the older and less healthy. That ratio has yet to prove satisfactory for many insurance companies ... Collectively, those groups spent close to $273 million on lobbying during the height of the Obamacare debate. They will surely spend a similar sum haranguing Congress to pass a replacement that favors them.