• 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.


    • These are all very sensible points, but you’re assuming that Roy is interested in some sort of exchange of ideas. Rather, he is interested in churning out articles/posts that undermine support for Medicaid, Medicare and any other government provided or subsidized health insurance scheme. You could, quite possibly, address/correct every issue pointed out by people like Roy and still not win them over. You have to accept that their beef is not with poor policy design or implementation, but with the existence of these programs, full stop.

    • That’s really helpful Justin. Of course Avik is not interested in the exchange of ideas, he’s just a partisan trying to score points.

      How ironic that on the same day Austin and Aaron make posts about labeling someone and/or questioning their motives for making an argument you’d be so quick to comment with an ad hominem attack on Avik Roy that questions his intellectual honesty. Also ironic that you assume his motivation is a partisan desire to end government involvement in health care, when his professed ideal system is that of Switzerland. Maybe you should take Austin and Aaron’s advice about putting people in boxes.

    • But to the original point; I can’t speak for Avik, but in my opinion abuses like this are totally unacceptable and we should be working hard to stop them before we expand Medicaid to cover 16 million more people, not after. And we should be more honest about the costs involved and how they compare to private insurance, since the supposedly egregious administrative costs of private insurance that prevent things like this from happening resulted in the terrible MLR regulations getting included in PPACA. How much closer are the administrative costs of Medicare/caid to that of private insurance when you subtract the tens of billions of fraudulent spending while simultaneously adding in more admin spending to prevent fraud?

    • I must have missed the part of my comment where I questioned Mr. Roy’s intellectual honesty. I merely asserted that he is not free from ideology. If he were, it is doubtful that an ideological think tank like the Heartland Institute would have him on its Board of Policy Advisors. One could probably make the same point about his writing for National Review. Or maybe his labeling of ACA as ObamaCare might also tip one off to his ideology?

    • Which is all to say that there is nothing wrong with having an ideology, but if that ideology is essentially opposed to public insurance programs then it is pointless to debate the merits of fixes to said policy’s shortcomings.

    • Justin, those two comments are just longer-winded ways of questioning someone’s intellectual honesty, and you’ve also conveniently ignored the factual problems with your description of Mr Roy. Everyone has an ideology, so we should focus on words and actions, and I think questioning someone’s motives based on the publication they write for is rather trite. I do not wish to get into an off-topic back and forth, so I’ll just leave it at that.

    • I imagine that Mr. Avik was assuming 10% fraud in Medicaid ($450 billion x 0.10 = $45 billion). Ten percent is a commonly cited estimate of fraud in New York’s Medicaid program and it has been for at least two decades. It is common, but it is also baseless.

      In “License to Steal: How fraud bleeds America’s health care system,” Malcolm Sparrow finds no basis for the ten percent estimate. It is what I would call a “guesstimate.” Sparrow argues that fraud could be considerably more or considerably less. He also finds no evidence that private insurers handle fraud any better than public programs, largely because so little is known about how much fraud goes undetected in either system. Also, there is a large grey area in fraud, e.g. when a doctor makes a diagnosis to allow patients to get needed services, that would be almost impossible to differ from errors in clinical judgment. Since the first edition of “License to Steal” came out in 1996, I have seen no better estimates of fraud in healthcare, though I welcome links.