By MATTHEW HOLT
Two weeks in the past I wrote an April Fool’s piece that claimed that Elon Musk and DOGE were going to nationalize American health care to avoid wasting cash. That piece was half-joking however full-serious.
In case you take a look at what Musk is complaining about there are two main areas of “waste, fraud and abuse” in authorities spending.
One is individuals instantly employed by authorities companies. The general public I’ve ever met in authorities work rattling laborious and for a lot much less cash than they’d get within the non-public sector. However you may in fact discover tales about useless government bureaucrats, who don’t do any work and pad their expense accounts. These tales are most likely about as true as Reagan’s pink Cadillac driving welfare queen in that there’s some foundation in actuality for there being a tiny minority of unhealthy actors, however the politics has far outrun the reality. (BTW that Welfare Queen article by Josh Levin in Slate is outstanding and very lengthy!)
The opposite main space the place Musk claims to be discovering fraud is in work contracted out. There are in fact plenty of sorts of authorities work contracted out. If, like me, you’re sufficiently old to recollect the Iraq struggle, you most likely are considering of beltway bandits like Halliburton supplying any variety of providers to the army. (Keep in mind when the Cheneys have been baddies?). One other is the Blue Cross & Blue Defend plans who have been the unique contractors processing Medicare & Medicaid claims. Funnily sufficient they couldn’t truly ship on that so in flip they outsourced it to Ross Perot at EDS and others like ACS, later Conduent. However there’s a ton extra throughout each company.
Musk & DOGE have been working round in essentially the most ham-fisted approach conceivable, axing each precise workers–together with 20,000 of the 80,000 working at HHS– and allegedly slashing $150 billion in contracts. After all on nearer examination, lots of the “contracts” were already over, or were made up. DOGE has been a pathetic piece of efficiency artwork that will be humorous if it hadn’t ruined so many careers of people doing great work, or killed so many desperately poor children in poor countries.
The intelligent individuals at Brookings, (Elaine Kamarck and Paul Light) in a detailed piece on the topic, got here up with an estimate of the ratio between direct workers and contractors.
As you may see the variety of civil servants (precise workers) has stayed about 2m for almost 15 years. The quantity of contractors has bounced round however been almost 2.5 occasions that quantity.
For the 4-5m jobs within the contract sector GAO has estimated that the 2023 value was a tad below $800 billion a 12 months, with 60% of that going to Protection.
Nonetheless, there’s a third class of presidency “contractors”. These are non-public corporations offering providers to non-public people for whom a 3rd celebration is paying. Generally the third celebration is the federal government, like CMS paying Medicare claims. Generally it’s a non-public entity like an employer paying one other one, like a hospital–however the prices are backed on either side by the federal government. Or generally the identical transaction is each paid for by the federal government and a non-public particular person, reminiscent of Medicare paying for some prices whereas a non-public Medigap plan pays for the remainder.
Musk and DOGE have principally ignored this.
You possibly can see the place I’m going right here.
These are usually not “contracts” they usually don’t present up within the GAO’s evaluation. In the event that they did the whole could be properly over $2 trillion in well being care alone. However they do signify authorities spending.
And daily in well being care there’s information about ways in which non-public corporations are being “over- compensated” for what they supply for that spending.
I’m not even going to speak about United HealthGroup and Medicare Benefit right here. In any case, even the Trump DOJ seems to think they’re guilty of upcoding and fraudulent danger adjustment.
However there’s loads of different examples
Caught with its hand within the cookie jar final month was the nation’s largest Medicaid plan, Centene. Medicaid is a state-based program, so if somebody strikes from one state to a different, the state and Federal authorities are imagined to cease paying the Medicaid plan in a single state, and as a substitute pay the plan in one other. Centene in fact is aware of this, however the WSJ discovered that it was telling its local plans not to inform the state that its members had moved away.
One Centene supervisor urged a few of the firm’s case managers in February to maintain Medicaid recipients enrolled after they moved. “Please DO NOT shut circumstances while you study a member has moved out of state,” the supervisor mentioned in a Microsoft Groups message. “If the member exhibits eligible and are out of state, they’ll nonetheless can [sic] make the most of a few of the advantages.” Centene’s spokesman mentioned the corporate is required to keep up protection for members till the state decides whether or not to disenroll a beneficiary.
Centene was amassing about $150m a 12 months for these sufferers who weren’t even dwelling in its protection space, and mendacity to the taxpayer about it. The WSJ makes clear that they weren’t alone. United, AetnaCVS, Molina and Elevance have been all doing the identical factor. Good pure revenue if you will get it!
In semi-related information, a few of the extra corrupt states are becoming a member of in. For example, Centene paid a $67m high quality in Florida for overcharging Medicaid for its PBM providers. Presumably that cash ought to have gone again to the Florida taxpayer, however the regime in Florida told Centene to give $10m of that money to a dark money public “charity” that’s the pet challenge of its founder, a Ms. Casey DeSantis. Who apparently is married to the governor of Florida and wish to be the following one!
Look I do know you’re all shocked that Florida Republicans and their pleasant lapdog firms are concerned in the sort of corruption, nevertheless it’s attainable that one thing not too dissimilar is going on within the blue collar Democratic stronghold of Pittsburgh, PA.
There we discover one other sort of presidency “contractor”, the College of Pittsburgh Medical Heart. UPMC has been constructing an empire for many years. I’ve written about its major league baseball style executive salaries, and others have exposed its corporate jets. However whereas UPMC has all of the affectations of a large for-profit company, Beckers studies that 70% of its income comes from authorities applications. However what benefit does being a non-profit convey for UPMC that the remainder of Pittsburgh residents don’t obtain? Yup, no have to pay property tax. On the $2.1 billion-worth of land they personal.
So when the mayor of Pittsburgh comes asking for the city’s share, UPMC isn’t precisely taking the excessive street.
To guard its standing, the hospital large is placing its thumb on the size in Pittsburgh’s hotly contested mayoral race, through which the democratic major election is going down on Could 20. The incumbent, Ed Gainey, was elected in 2021 and has been a vocal critic of the medical heart’s growing portfolio of tax-exempt properties, alleging that the middle is misusing its nonprofit standing by granting tax exemptions to ineligible properties. The progressive mayor is dealing with a stiff problem from County Controller Corey O’Connor, who’s working because the top choice of the Pittsburgh improvement and actual property communities, raking in money from native actual property moguls, longtime Republican donors, and notably, hospital board members. That features board members of the College of Pittsburgh Medical Heart and its related Kids’s Hospital Basis. All collectively, these members and their households have contributed at the least $25,000 towards O’Connor’s mayoral marketing campaign to this point this 12 months, in line with campaign finance records.
This doesn’t strike me because the conduct of a worthy impartial charitable group, and admittedly neither does the conduct of many different main well being care programs. To quote myself (yeah, yeah, I do know its nonetheless plagiarism),
During the last 30 years America’s venerable group and parochial hospitals merged into massive well being programs, principally to have the ability to stick it to insurers and employers on value. Blake Madden put out a chart of 91 health systems with greater than $1bn in income this week and there are about 22 with over $10bn in income and a bunch extra above $5bn. You don’t want me to remind you that a lot of these programs are responsible with excessive prejudice of monopolistic price gouging, screwing over their clinicians, suing poor people, managing huge hedge funds, and paying dozens of executives like they’re taking part in for the quickly to be ex-Oakland A’s. Just a few received LA Dodgers’ style money.
Significantly galling is the amount of cash sloshing round of their hedge funds. I’ve made a really, very tough estimate that there’s most likely $500 billion within the “reserves” of the massive hospital programs and the non-profit Blues plans, nevertheless it could be $1 trillion.
So what’s my reply?
Nationalize the lot of them.
If the hospitals and medical doctors have been a part of authorities companies just like the VA or the US Marine Corps, all of this theft and corruption would both disappear, or be managed by OIGs and others.
There’d be no want for them to have these hedge funds. Or the funds to non-public insurance coverage corporations. That cash might be used for good quite than revenue.
Salaries might be adjusted to replicate these paid to excessive paid public sector workers. If the President of the USA will get $400k a 12 months, why does the CEO of a regional medical heart want $14m? For that matter a clinical service line head at the VA could make as much as $400k a 12 months, which doesn’t sound loopy low. Clearly there must be a ton of changes which might most likely embody making medical faculty free, however general being a doctor would nonetheless be a excessive paid career–as it’s in the remainder of the world. And we may return to them a ton of energy and autonomy that has been stolen from them by well being plans and directors.
Now I do know it will come as an anathema to most People. They are going to accurately say that SpaceX (regardless of Musk being its nominal CEO) was capable of put rockets in orbit much cheaper than NASA did.Which may be true in lots of areas of the financial system nevertheless it’s not true in well being care. We spend approach, far more per head than nations with government-delivered programs.
Lastly, a nationalized well being system would allow us to take away a few of the largest inequities and idiocies in our present authorities based mostly insurance coverage system. Exhibit A is Medicaid. Having one Federal authorities program for individuals over 65 and the disabled (Medicare) and a wholly totally different state-based one (Medicaid), which spends 1/2 of its cash on people who find themselves over 65 and disabled and who’re additionally within the Federal program is obvious silly and at all times has been.
A nationalized system would take away the second class standing of the ⅓ of our residents who don’t have Medicare or good non-public insurance coverage, and would allow our medical professionals to follow drugs the best way they needed to after they have been younger and idealistic.
Clearly getting American well being care from right here to there through nationalization–a British phrase from the Nineteen Forties that hardly has any which means right here–is near unattainable.
However inform me it isn’t the appropriate factor to do. Even should you solely care about lowering waste, fraud and corruption.
Matthew Holt is the Founder, Writer and an Creator at THCB
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