In his RealClearPolitics article, “Single-Payer Healthcare Will Increase Fraud, Corruption,” Chris Jacobs attempts to convince readers that using a Medicare For All single-payer system will cost taxpayers billions of dollars every year due to rampant fraud.1

Although every healthcare system will experience attempted fraud, universal healthcare systems actually have lower fraud rates than the current U.S. mixed healthcare system. Additionally, healthcare programs such as Medicare, Medicaid, and the VA (Veterans Administration) are not true single-payer systems, so comparing them to a single-payer system like Medicare For All is not an accurate approach.


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What You Need to Know

  1. Private insurance fraud is harder to identify because private insurance companies don’t typically report fraud rates and costs.
  2. The simplicity of a single-payer healthcare system like Medicare For All makes detecting fraud, corruption, and abuses easier to track.
  3. Other countries with single-payer healthcare systems similar to Medicare For All have lower rates of fraud than the current U.S. system.

FACT 1: Private insurance fraud is harder to identify.

Private insurance fraud is harder to identify because private insurance companies don’t typically report fraud rates and costs. This makes it easier for fraud to thrive and harder to track abuses and insufficient documentation that drive up costs. However, a large portion of Medicare fraud and associated costs come from abuses by private insurance companies that operate Medicare Advantage plans.

  • Centers for Medicare & Medicaid Services (CMS) audits show that Medicare Advantage programs run by private insurance companies had an estimated 9.5% fraud rate for 2013, primarily due to the Medicare Advantage organization reporting that its patient population was sicker than they actually were (a.k.a. “upcoding”) in order to receive higher capitation payments. These costs are pushed onto taxpayers and onto enrollees in the form of higher premiums and deductibles. 
  • There is very little public data on the occurrence rates of fraud in private health insurance programs, but Medicare Advantage plans, which are run by private insurance companies, can give us a glimpse into what those figures may be.
    • CMS estimated that it improperly paid $14.1 billion in 2013 to Medicare Advantage organizations, primarily because of upcoding the risk scores of their populations—about 9.5% of the total costs of Medicare Advantage to Medicare. 
    • The overall rate of improper payments made by Medicare in 2018 were primarily due to errors and/or insufficiencies in paperwork, according to CMS’ comprehensive Error Rate Testing Program.
      • CMS calculates the Medicare Fee-For-Service (FFS) improper payment rate yearly through its Comprehensive Error Rate Testing Program
      • In 2018 the overall rate of improper payment for Medicare FFS was determined to be 8.12% amounting to $31.62 billion. 
      • CMS determined that the most common cause of improper payments was insufficient documentation, which comprised 58% of all improper payments (2018 CMS CERT Report).
      • The second largest cause was the determination of medical necessity (21.3%), followed by incorrect coding (11.9%), and no documentation (2.6%). Other causes made up a total of 6.3% of improper payments.

FACT 2: The simplicity of single-player makes detecting fraud easier.

The simplicity of a single-payer healthcare system like Medicare For All makes detecting fraud, corruption, and abuses easier to track.

  • It is much easier for fraud to thrive under the United States’ currently opaque, complicated system. The simplicity of a single-payer system makes fraud easier to detect.
  • Under a single-payer system, all procedures and paperwork would be uniform. This simplifies the process and makes it easier to prevent improper payments even before they are made. 
    • The UMass PERI Medicare For All study includes a summary regarding fraud, saying that simplifying billing and processing can make it easier to detect and prevent fraud. UMass study summary (p. 65): 
      • Simplifying and centralizing billing and claims processing under Medicare for All will contribute to cost controls for two reasons:
        • It will be easier for advanced automated analytic systems to detect fraud under Medicare For All compared with the current system, which includes numerous state and federal agencies in the public sector along with private insurers that operate within varying regulatory environments in different states; and
        • Medicare For All will reduce the large number of federal and state agencies currently charged with administrative oversight of fraudulent activities.

FACT 3: Countries with single-payer systems have less fraud.

Other countries with single-payer healthcare systems similar to Medicare For All have lower rates of fraud than the current U.S. system.

  • According to rates reported by the Organisation for Economic Co-operation and Development (OECD)2, member countries with single-payer healthcare systems similar to Medicare For All have lower rates of fraud than the current U.S. system.
    • The OECD reports that member countries have a 6% average rate of fraud.
    • This is slightly lower than the fraud rate of U.S. Medicare (about 7%).
    • This is significantly lower than the fraud rate of Medicare Advantage plans, which are run by private organizations (about 9.5%).

Goals

  • Author to edit or retract the inaccurate claims
  • Real Clear Politics to print a correction

Who to Contact

Chris Jacobs, authorTwitter:
@chrisjacobsHC
Insist on a follow-up story about the facts on M4A
RealClearPoliticsTwitter: 
@RealClearNews
Facebook:
https://www.facebook.com/realclearpolitics/
Insist on follow-up story about the facts on M4A
Carl M. Cannon
Executive Editor & Washington Bureau Chief
Twitter:
@CarlCannon
Email:
ccannon@RealClearPolitics.com
Insist on follow-up story about the facts on M4A
Nicholas Nordseth
Senior Politics Editor
Email:
nnordseth@RealClearPolitics.com
Insist on follow-up story about the facts on M4A
Tom Bevan
Publisher
Twitter: 
@TomBevanRCP 
Email:
tom@RealClearPolitics.com
Insist on follow-up story about the facts on M4A

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  1. Jacobs, Chris. “Single-Payer Health Care Will Increase Fraud, Corruption.” RealClearPolitics, 18 June 2019, www.realclearpolitics.com/articles/2019/06/18/single-payer_health_care_will_increase_fraud_corruption_140579.html.
  2. The Organisation for Economic Co-operation and Development is an international organization that works to build better policies for better lives (an index for quality of life beyond GDP/economic factors). The goal of OECD is “to shape policies that foster prosperity, equality, opportunity and well-being for all.” The OECD works with “governments, policy makers, and citizens to find evidence-based solutions for a range of social, economic and environmental challenges.” Becoming a member of the OECD is the result of a rigorous review process. A full list of member countries and current candidates to join can be found here.

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