There’s Fraud and Then There’s Government

A hundred and seven people in numerous cities have been charged with defrauding Medicare. The cost of their dishonesty is estimated at near a half billion dollars. As with any entitlement program, there are leaks, and recipients misrepresent their circumstances to grab more dough. Some believe that Medicare fraud costs the government up to $90 billion a year.

Chump change, I say, compared to the real fraud here: A Ponzi scheme of epic proportions, yet one that is made all the more morally dubious in that those who pay into it are not just tricked, but coerced at gun point.

Of course, I’m referring to Medicare itself. The program was essentially invented by Otto von Bismarck, the Prussian autocrat, and then copied in one state after another before it became incorporated into Lyndon Johnson’s Great Society in 1965. The final plan had bipartisan support.

By 1971, the payments had risen to almost $8 billion a year—eight times what they had been in the first year. Congress has repeatedly attempted to cut costs and make the program solvent—with the 1973 HMO Act, caps on hospital construction in 1974, regulations limiting hospital stays in the 1980s, and the 1996 Health Insurance Act’s creation of penalties for Medicare fraud, as determined by the Department of Health and Human Services.

Yet despite all these fixes, the program has continued toward its own bloated explosion, and has always amounted to a regressive attack on the paychecks of the young and healthy, promising one generation after another the program will help them out once they retire, all at the expense of the next generation. Talk about taxation without representation! It is a promise on the tax receipts of those who are not yet born. It is inter-generational plunder, and it has driven up the costs of medical services and drugs for the elderly, to boot, forcing those who accept Medicare to agree to all manner of limitations on their health services, causing prices to rise to impose larger out-of-pocket costs on the retired than they faced before the mid-1960s.

George W. Bush won the presidency promising to expand this criminal enterprise, and did so when he signed the Medicare Modernization Act of 2003 in the name of “honoring the commitments of Medicare to all our seniors.” It was a huge surge of corporate welfare to the pharmaceutical industry, the largest expansion of entitlements in almost forty years, and a great erosion of the rights and responsibilities of individuals.

In 2003, Medicare’s Board of Trustees cited Bush’s subsidy as a key factor in its adjusted estimate of when Medicare would go bankrupt—by 2019 instead of 2026. It’s already contributing hundreds of billions to the deficit and will eventually overtake other federal expenditures or go bust, unless something else gives.

Obama has promised not to divert too much funding from Medicare toward Obamacare, although those who fear he will break such vows and who wish to keep Medicare intact are ignoring the reality: the program cannot be sustained. For those who fear socialized medicine, we already have a huge dose of it in this country—Medicare itself—and it will bankrupt this country unless we work toward its abolition.

Instead of going after doctors and patients trying to get what they can out of this broken system, we should focus most of all on the true criminal masterminds in Medicare fraud. Lyndon Johnson died in 1973 but many who have since carried out his dirty work are still around.

  • Catalyst