Fraud is a huge problem for American health insurance — both public and private. As the Cato Institute’s Michael F. Cannon pointed out in NR several months ago, fraud against Medicare and Medicaid alone costs about $87 billion a year.
The good news is that the Obama administration is on track to increase health-care-fraud prosecutions by about 85 percent this year. The bad news is that it’s not enough — last year, there were only 731 such prosecutions; another 600 or so will be merely a drop in the bucket.
Over at the Cato blog, Cannon quotes fraud expert Malcolm Sparrow:
By taking the fraud and abuse problem seriously this administration might be able to save 10 percent or even 20 percent from [the] Medicare and Medicaid budgets. But to do that, one would have to spend 1 percent or maybe 2 percent (as opposed to the prevailing 0.1 percent) in order to check that the other 98 percent or 99 percent of the funds were well spent. But please realize what a massive departure that would be from the status quo. This would mean increasing the budgets for control operations by a factor of 10 or 20. Not by 10 percent or 20 percent, but by a factor of 10 or 20.