THE BLOG

Fiscal Follies: on Medicare, the Government's Wasting More Than Money

Mar 07, 2011 | Updated May 25, 2011

One of the first things budget experts will tell you is that we're never going to get the federal deficit and national debt under control by eliminating waste and fraud. You could eliminate whole departments like commerce, agriculture, and education and barely make a dent in the problem. You could slash defense spending by half, and we'd still have mega-challenges on the budget.

What everyone who's looked at the facts says is that the real ticking time bomb is the combination of rising health care costs and an aging population that will put spending on programs like Medicare into overdrive. They're absolutely right.

Yet the reports of waste and fraud just keep on coming. Unless the government starts coming up with effective answers on addressing it, most Americans will never accept the more fundamental changes we need to make. And frankly -- why should they?

Consider this. Last week from the Government Accountability Office, the independent auditing arm of Congress said that fully 10 percent of all the bills paid by Medicare - about $48 billion per year - are "fraudulent or otherwise improper ."

Medicare provides health insurance to more than 38 million older Americans and another 7.6 million disabled Americans. Most of these people probably couldn't get insurance in the private market even if they could afford it. Most Americans see Medicare as a vital program, if ever there was one. But it has been on the GAO's list of "high-risk" programs for years, both because of the potential for fraud and because of its basic finances . With health care costs consistently rising at twice the overall rate of inflation, and with 78 million baby boomers becoming eligible for benefits over the next couple of decades, Medicare is the single biggest fiscal challenge the government faces.

In fact, the projections on Medicare are so huge, so daunting, that even if we eliminated that 10 percent of improper billings, we'd still be in trouble. it's so enormous that the most significant health care overhaul in decades -- the reform plan passed in 2010 -- only bought us more time. The best available projections say the new health reform extended the life of the Medicare trust fund by 12 years, which is significant, but not a solution. Even with those changes, the Congressional Budget Office projects Medicare spending will nearly double in 10 years, to close to $1 trillion.

So we simply have to look at much more fundamental changes including tax increases, spending cuts or even more dramatic health care reform to address this problem -- and very likely all of the above. Why not just get on with it?

Because the public won't let you. Eighty-one percent of Americans -- and that's the public overall, not just seniors -- say it's more important to prevent major cuts to Medicare than to reduce the budget deficit.

Is there any conceivable way out?

We've seen typical Americans talk about the federal deficit in focus groups as part of research conducted by our organization, Public Agenda. And amazingly, once people begin to grapple with the problem seriously--to look at the numbers and weigh the options, most accept that tax increases and spending cuts will be needed to get the budget back on track.

But one of the most consistent questions people raise is this: Why should they sacrifice, why should they pay more or get less, when the government does such a bad job of spending the money it's already got carefully and wisely? How do they know that the government won't just collect more taxes and waste that, too?

That's the barrier. Medicare is incredibly important to Americans - one recent Public Agenda survey found six in 10 say preserving Medicare and Social Security would be one of the most effective ways of helping financially struggling people become economically secure.

But most people aren't going to be open to the kinds of changes need to save Medicare unless they're convinced that government is reducing the fraud and the waste and the sloppiness. People know it's there. Surveys find nearly 7 in 10 agree there's too much fraud in Medicare. Half say the program wastes money. 46 percent say some people on Medicare get "more tests and services than they really need ."

There's every indication that Americans are ready to talk about tackling the waste and fraud in Medicare. The question is where lawmakers and government officials are ready and willing to act.
When the government allows waste and fraud to persist and fester, it 's not just throwing away money. It's throwing away the public's confidence and trust. And without that, the United States cannot hope to make the hard decisions we need to make to get our federal finances under control.