Sometimes spending money saves money

There are times in medicine, as with anything, when you need to spend more money to do good. There are also times when you need to spend money to save money. Yes, that may seem odd, but it’s true.

Say for example, your roof is leaking. You know it will cost $10,000 to fix it. Maybe you’re cash-strapped and think you can’t afford it. But, you know that if you don’t fix it, you’re likely to sustain $30,000 in water damage over the coming year. So, you have to spend money in order to save overall. You wouldn’t be too fond of friends and family who called you wasteful for doing so, or advocated that you just abandon the house since it needs repair.

I bring this up, because it seems like this is the argument many make when it comes to Medicaid. Avik Roy posts about a fraud scheme in Medicaid today. There’s a doctor in New York who bilked Medicaid out of $3.4 million. Yes, it’s an anecdote, be he uses it to make a larger point:

The feds recently raided the third-ranked ambulette chaser, another storefront clinic, accusing it of “colluding with ambulette provider Majestic Transportation, which took in $3.45 million from Mediciaid in 2009, to milk the system.” In total, New York State spends over $300 million a year on ambulette services: paying as much as three times normal cab fare, often for people who are perfectly capable of walking or taking public transportation.

These multimillion-dollar figures may not sound like much, when you consider that we spend $450 billion a year on Medicaid. But these are not isolated instances of fraud: indeed, they are symptomatic of a widespread problem that is estimated to cost taxpayers $45 billion annually.

Up until now, he has me. Medicaid fraud is a problem (although the link he used does NOT say that the cost was $45 billion a year, so I’m going to assume Avik has another source that he didn’t link to). So be it. Crack down on the fraud. But Avik didn’t stop there. He ends thusly:

But don’t worry—it’s all good.  We can solve all of Medicaid’s problems byspending more money.

And that’s where I’m lost. The fraud is the leaky roof.  You know what I’d do? I’d invest in fraud prevention. I bet we can solve this issue at a cost that’s far less than the actual fraud. We’d save more money by investing some. Advocating for some spending in this area isn’t worthy of snark.

Moreover, it’s not worthy of snark in general. I (and other) members of the “spend more money brigade” don’t believe that the solution to all health policy problems is to spend more money. I believe the solution to the fraud problem is to invest in fraud prevention. I believe that the solution to the doctor under-reimbursement problem is to spend more money to pay doctors more. But there are lots of areas of Medicaid where we could spend less. But when someone wants to do that, it’s rationing and death panels.


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