Making bad government a little better

posted at 7:21 pm on July 13, 2012 by Dustin Siggins

For proponents of a more responsible government, this week offered both good and bad news. The good news: on Wednesday, a Detroit Free Press article noted that since 2007 “Medicare fraud task forces operating in Detroit and eight U.S. cities with high rates of health care fraud have charged 1,300 defendants with more than $4 billion in false claims.”

From the article:

Federal officials said today’s arrests should serve as a warning that the strike forces are watching the health care industry very closely.

“We want providers to know that we are scrutinizing billing records to root out fraud,” U.S. Attorney Barbara McQuade said in announcing today’s arrests.

Unfortunately, the bad news: in addition to Erika’s post on Monday regarding $14 billion in fraud by unemployment benefit recipients, on Tuesday the Washington Post reported that companies contracted to prevent Medicare fraud have a high rate of conflicts of interest:

Firms that are paid tens of millions of dollars to root out Medicare fraud are bidding on contracts to investigate companies they are doing business with — sometimes their own parent companies, according to a government report released Tuesday.

Two-thirds of the companies that bid on contracts during a nearly year-and-a-half time period beginning in October of 2010 had financial ties to claims processors — and in some cases also processed Medicare claims themselves, according to the study by the U.S. Department of Health and Human Services’ inspector-general. The report blames what it calls a flawed bidding system and an inadequate conflict-of-interest policy.

The study looked into bids from about 100 potential contractors and subcontractors and found nearly 2,000 relationships that posed potential conflicts. For example, one company submitted a bid to investigate Medicare fraud even though its parent company provided two types of Medicare coverage in all 50 states.

When it comes to balancing the federal budget, many conservatives focus on the need to eliminate fraud/waste/abuse/duplication, worth a minimum of tens of billions of dollars annually and potentially as much as 20% of the federal government’s spending per year. Yet the challenge in fixing this problem is not in clawing back the money afterwards, or spending money up front for preventive measures that save far more than is spent. The actual problem is often simply finding where the inefficiencies are and changing the process itself, both significant challenges in a federal government as large and complex as ours.

As a conservative, I support a simple solution: eliminate the problem by eliminating or shrinking departments. This would have the bonus of shrinking the size and scope of the federal government and saving a lot of tax dollars. However, since this is not going to happen in today’s political climate, I’ve found the next best thing: two bills introduced by Senator Tom Carper (D-DE) aimed at preventing Medicare and Medicaid fraud and preventing improper payments. (Carper was also one of three Democratic senators whose efforts led to the aforementioned study on conflicts of interest within companies bidding for anti-fraud contracts within Medicare and Medicaid.)

The Medicare and Medicaid Fighting Fraud and Abuse to Save Taxpayer Dollars Act (FAST Act) was introduced in June 2011, and has a number of co-sponsors, including original co-sponsorship by Senator Tom Coburn (R-OK). This legislation requires, among other things, greater inter-agency coordination, pre-payment review, and annual reports on vulnerabilities to fraud. With Medicare possessing an estimated $60 billion in fraud, and Medicare and Medicaid combined having $70 billion in improper payments per year, there is clearly much improvement needed to keep taxpayer dollars spent more honestly and wisely.

Carper also introduced the Improper Payments Elimination and Recovery Improvement Act of 2011 approximately a year ago. This legislation is a bit less complicated than the FAST Act, and focuses primarily on the Office of Management and Budget coordinating different agencies more efficiently, establishing a Do Not Pay list, and aim to recover improper payments from at least 10 agencies.

Improper payments, which are typically done with no ill intent and through simple error, are a relatively simple way to prevent future inefficiencies. According to a Senate staffer I met with to discuss how to diminish fraud, waste, abuse, and duplicity, a large part of the solution is simply instituting standardized oversight throughout each federal agency and implementing an effective Do Not Pay list. While the staffer said only 50% of improperly paid funds would be likely recoverable, this would prevent over $60 billion annually in spending (improper payments totaled $115 billion in 2011, or about three percent of spending, but that number does not include a number of federal agencies, including the Defense Department, so I suspect the actual amount improperly spent is much higher than $115 billion). Not a lot compared to our budget, but certainly not a drop in the proverbial bucket.

Inefficiently spent dollars are not going to prevent a fiscal collapse, especially when legislation mostly consists of clawing back money after the fact or using technocratic methods for prevention. Again, the most effective way to prevent improper payments, fraud, duplication, etc. is to eliminate the problem, in this case the relevant department or agency. In absence of this, Carper’s efforts should be commended, and in fact Carper notes that the FAST Act has bipartisan support among activist groups, including AARP, Citizens Against Government Waste, Center for American Progress, the National Taxpayers Union, and Taxpayers for Common Sense.

Unfortunately, it appears neither bill has moved since their introduction, so even these modest measures to bring down the deficit are unlikely to happen without a great deal of support from grassroots Americans. They both have House companion bills, and at least one has had a hearing in the House, but with fewer than 15 legislative work days until the August recess, and scant few between the end of the recess and the election, the odds of passage in the 112th Congress aren’t good.


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It just doesn’t make any sense…imagine the number of people that work in Government that create nothing of value, but they consume wealth and opportunity.

tom daschle concerned on July 13, 2012 at 7:26 PM

Ok, so we need a new law to fix an old law that was passed to fix a previous law.

I think I see a pattern here.

chimney sweep on July 13, 2012 at 7:27 PM

…how’s about long jail terms…instead of just plea bargaining paybacks and fines?

KOOLAID2 on July 13, 2012 at 7:37 PM

“Again, the most effective way to prevent improper payments, fraud, duplication, etc. is to eliminate the problem, in this case the relevant department or agency.”

“BOOOOOOOOOOOO…!!!” – NAACP

Seven Percent Solution on July 13, 2012 at 7:39 PM

Get rid of Medicare? Heh. We couldn’t even get SCOTUS to strike down Obamacare… we just got a new tax.

MeatHeadinCA on July 13, 2012 at 7:42 PM

Ok, so we need a new law to fix an old law that was passed to fix a previous law.

I think I see a pattern here.

chimney sweep on July 13, 2012 at 7:27 PM

Exactly.

davidk on July 13, 2012 at 7:48 PM

Am I missing something? Is there a way to enlarge the graph associated with this story?

obladioblada on July 13, 2012 at 7:52 PM

Speaking of more Fraud………………………………

20 Principals and Assistants Removed for CPS Lunch Scam
Friday, Jul 13, 2012
Updated 4:12 PM CDT
********************

The Chicago Public School system has removed 20 officials, 12 of which are either principals or assistant principals,

for allegedly falsifying free and reduced lunch forms for their own children,

according to a report from the Office of the Inspector General and CPS.
(More..)
========

http://www.nbcchicago.com/news/local/12-Principals-and-Assistants-Removed-for-Lunch-Scam-162356866.html

canopfor on July 13, 2012 at 8:09 PM

Next let’s have a similar strike force to root out fraud in Social Security Disability.

slickwillie2001 on July 13, 2012 at 8:16 PM

Fraud waste and abuse should be dealt with and swiftly by federal law enforcement. Spending should be cut at the ground level by managers that actually spend the money not by congress critters that are in tight races. Start with a federal hiring freeze and modest 10 or 15 percent across the board spending cut.

mike_NC9 on July 13, 2012 at 8:35 PM

It is impossible to make bad government better, because government, by its very nature, is coercion and force.

Dante on July 13, 2012 at 8:47 PM

Anyone see Sheriff Joe? Or is he still out stumping and telling sex jokes?

GarandFan on July 13, 2012 at 8:53 PM

Medicare, SS, DOE,EPA,FDA,USDA,USF&W, blahblah blah.
None of these agencies are doing anything enumerated by the Constitution.
They all need to go.
And NO.
The environemnt will not implode, explode, etc. & people won’t start dying of bad medicine or food poisoning etc.
But since America is full of cowards, go ahead & keep thinking govt agencies protect you & keep you safe.

Badger40 on July 13, 2012 at 8:54 PM

Dante on July 13, 2012 at 8:47 PM

Government is also citizen driven by nature. We have the exact government we made for ourselves.

mike_NC9 on July 13, 2012 at 9:01 PM

It is important to remember that government interference always means either violent action or the threat of such action. The funds that a government spends for whatever purposes are levied by taxation. And taxes are paid because the taxpayers are afraid of offering resistance to the tax gatherers. They know that any disobedience or resistance is hopeless. As long as this is the state of affairs, the government is able to collect the money that it wants to spend. Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom. – Ludwig von Mises

Nothing appears more surprising to those, who consider human affairs with a philosophical eye, than the easiness with which the many are governed by the few; and the implicit submission, with which men resign their own sentiments and passions to those of their rulers. When we enquire by what means this wonder is effected, we shall find, that, as force is always on the side of the governed, the governors have nothing to support them but opinion. It is therefore, on opinion only that government is founded; and this maxim extends to the most despotic and most military governments, as well as to the most free and most popular. – David Hume

Let’s investigate more closely. The government decrees what its citizens may and may not do, and threatens violence against recalcitrant individuals who disobey. The citizens acquiesce to government rule, but they do so under duress. This point is crucial: the citizens are acquiescing under the threat of coercion. In other words, the majority of people, under the threat of coercion, do comply with the government’s dictates, while recalcitrant individuals are directly coerced. Thus, government is coercive.

But if the government is vastly outnumbered by its citizens, why do they put up with its coercive dictates? Why don’t they rise up and overthrow it? The answer is public opinion: the citizens, steeped in statist ideology, believe that government is just and necessary, and hence refrain from revolting. More specifically, public opinion creates a collective action problem. If most people believe in statism, then one individual’s resistance to government will achieve nothing except martyrdom. The government can dispose of one lone resister. If most people believe in anarchism, however, then their combined resistance will be sufficient to topple the government. The government’s existence depends on what the public believes. The difficulty lies in coordinating simultaneous and effective resistance. Thus, the power of government rests on public opinion.

(So Boétie is incorrect to say that “It is… the inhabitants themselves who permit, or, rather, bring about, their own subjection, since by ceasing to submit they would put an end to their servitude.” It’s true that their coordinated resistance would bring down the government. But it’s wrong to say that their servitude is voluntary or consensual, because as we’ve seen, the government threatens them with coercion. It might be the case that governments are more or less coercive depending on the credibility of their threats.)

(Also, his statement “I do not ask that you place hands upon the tyrant to topple him over, but simply that you support him no longer” needs clarifying. It’s not that people just have to withdraw their “consent”. Rather, they have to disobey the government and make it carry out it’s threat of coercion; they have to call the government’s bluff. So “removing your support” means potentially incurring the wrath of the state.)

Thus, there is no paradox at all. Government is coercive and draws its power from public opinion. But this raises the question: if coercion is not the base of government’s power, then is it a necessary feature of government? The answer must be yes; government just is a coercively maintained territorial monopoly of ultimate jurisdiction.

This raises the following question: if coercion is not the base of government’s power, then is government a necessary feature of society? This question is the driving force of market anarchism. As Long writes: “if governmental force is impotent except insofar as it accords with public opinion, then … it is public opinion, not governmental force, that actually maintains social order, in which case we can safely dispense with governmental force and rest social order on public opinion alone.”

- A gentleman named Sage

Dante on July 13, 2012 at 9:05 PM

Government is also citizen driven by nature. We have the exact government we made for ourselves.

mike_NC9 on July 13, 2012 at 9:01 PM

How wonderful you just posted this just now. Please read my post directly following yours.

Dante on July 13, 2012 at 9:05 PM

Firms that are paid tens of millions of dollars to root out Medicare fraud are bidding on contracts to investigate companies they are doing business with — sometimes their own parent companies, according to a government report released Tuesday.

Pay firms a bounty for each fraud off the top of any dollars collected, and prevent them from investigating parent or partner companies by severely fining them for such transgression A jail sentence wouldnt hurt either

Produce a reality tv show having The Dog go out and collar Medicare fraudent providers in return for bounty. Combine the captures with profiles of victimized elders

entagor on July 13, 2012 at 11:17 PM

Imagine a world without the welfare state.

AshleyTKing on July 13, 2012 at 11:30 PM

Has anyone noted that $4 Billion by 1,300 individuals means that the average fraud must have been over $3 Million? I’d like the juries to be made of poor, working class people.

njcommuter on July 13, 2012 at 11:52 PM

Produce a reality tv show having The Dog go out and collar Medicare fraudent providers in return for bounty. Combine the captures with profiles of victimized elders

entagor on July 13, 2012 at 11:17 PM

A show like that might actually get me to watch TV once in a while.

MelonCollie on July 14, 2012 at 12:25 AM

In China, sometimes at least, government officials have been executed for fraud against their citizens. Just sayin’.

LtGenRob on July 14, 2012 at 6:48 AM