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Nov 18 2009, 10:28 am by Derek Thompson

$98 Billion: Embarrassing Wasteful Spending for White House

Health care spending isn't just the main driver of our debt. It's also the main driver of our waste. The federal government made $98 billion in improper payments in 2009, about 5 percent of total spending. Improper payments are funds that "go to the wrong recipient, the recipient receives the incorrect amount of funds, or the recipient uses the funds in an improper manner," according to the White House. And more than half of the waste -- $54.2 billion -- came from Medicare and Medicaid.*

How did this happen?

The White House is mounting a two-pronged defense. First, they argue that when you spend more money, you're likely to waste more money. I suppose that's true, but improper payments raced increased by 40 percent over 2008, and federal spending increased by only 18 percent. Second, just as the Obama administration has claimed that its high deficit figures are, in small part, the result of more honest accounting, they claim that stricter, more honest standards for improper payments are making the jump look more dramatic.

That could be true, but this is still rotten news for the administration and it's no wonder they released this information during a 6:45 p.m. conference call while half the district's journalists were at happy hour. Half of the intended savings under health care reform come from eliminating waste and fraud in Medicare. The waste is certainly there! But the administration's will and ability to do something about it will come under increased scrutiny with today's report. 

*Here are some additional stats. The Improper payment rate in Medicare Advantage climbed to 15.4 percent. A fifth of the $12.3 billion in improper payments for jobless insurance were the result of fraud.

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Comments (4)

John Thacker
Half of the intended savings under health care reform come from eliminating waste and fraud in Medicare. The waste is certainly there! But the admin's will and ability to do something about it will come under increased scrutiny with today's report.

Especially since the Administration claims on the one hand to be able to eliminate waste and fraud in Medicare, but on the other hand claims cost savings by continuing Medicare's low rate of spending on oversight. Decreasing waste and fraud may me spending more on compliance, reducing Medicare's advantage on costs.*

*Many of the figures on Medicare's cost advantages are framed in terms of Medicare having a lost cost of paperwork per dollar spent. But we should expect that, since Medicare handles sicker people who get more expensive treatment. There's a certain paperwork cost for a healthy person who doesn't get any treatment, or for a healthy person who only gets preventative care. We shouldn't expect the cost of paperwork to rise proportionately just because someone is getting prescribed a more expensive drug or getting a more expensive treatment.

market karma

"The White House is mounting a two-pronged defense. First, they argue that when you spend more money, you're likely to waste more money."

Hmmm --- and the Whitehouse wants the government to spend A LOT more money on healthcare. The above seems like an inconvenient and untimely admission.

HawkCW4

This is so stupid, If they know how much and where the waste (fraud) is, then why are they not arresting people, removing people from access to commit fraud, Removing the ability for those who cheated, from ever cheating again... AND we are supposed to embrace all this new spending and more ways of stealing tax payers money...

jct405

cost savings will result from both the house and, now, the senate versions of healthcare reform. but not from direct intervention.

rather, by aligning healthcare providers', payors', and patients' interests, costs will plummet.

this is achieved, as outlined in both versions and as agreed on both sides of the aisle, by prohibiting denial of coverage for pre-existing conditions or revocation of coverage when a patient becomes ill.

this aligns profit incentives throughout the healthcare sector with keeping patients healthy.

all the rest seems like distraction.