One theoretical benefit of a single-payer health system is an ability to control costs through full-cycle management. We’ve seen how well that works with the VA system over the last couple of years, and more accurately for the last several decades. A CBS News report last night demonstrates how effective that is in Tricare, part of the system that services both veterans and active-duty military personnel, as well as their families. CBS reports that prescription scams are costing taxpayers “hundreds of millions a month” in dubious ointments and other medication coming from compounding pharmacies, prescribed by doctors who never see their patients. A news crew caught up with one doctor, who claimed he’d gotten out of the business:

Marketers peddling pain and scar creams directly to military personnel are costing the Pentagon hundreds of millions of dollars a month, according to Major General Richard Thomas. Thomas, who oversees TRICARE, the military’s health benefit system, says doctors are complicit in the process.

“They’re getting providers, doctors or whomever to write scripts, fill in scripts without even seeing the patient,” said Thomas. …

Two weeks later — without ever seeing a doctor or even talking to one — we received a package from Haoyou Pharmacy in California. It contained pain and scar creams prescribed by Paul Bolger, a doctor who runs a weight loss clinic in Davenport, Iowa.

When we visited Dr. Bolger’s office last week, he agreed to answer a few questions. When asked if he was doing something wrong Holger said: “I couldn’t disagree with that.”

“I’m not going to make excuses for what I was doing,” said Dr. Bolger. “It’s not that I had bad intentions, it was that I was under the mistaken impression that patients such as yourself were being spoken with by a qualified medical provider — someone who’s qualified to screen you, do a intake over the phone, and make sure you were safe to have these meds.”

Clearly there’s something fishy going on with these scams, but CBS doesn’t tell the whole story here. Private insurance companies operate prescription plans with in-house formulary, a list produced by insurers that determines which medicines will get covered by plans and at what rates. Anyone who has had to get an unusual prescription on private insurance has had to produce a letter of medical necessity that explains why that particular drug should be used instead of another one already on the formulary. My wife has had to do this a number of times due to her transplant medications, even while using a Medicare supplemental plan.

However much difficulty this presents (not usually much, as private-sector insurers are normally efficient at the process), the reason for it is obvious. It’s to prevent what CBS found at Tricare: fraud and exploitation, both of their stockholders and of their customers. They don’t lose “hundreds of millions of dollars a month” because they maintain control of reimbursements up front, and follow through to make sure that doctors really have been in contact with patients who get unusual or exotic prescriptions.

Oddly, CBS never asks Maj. Gen. Richard Thomas why Tricare doesn’t simply remove these compounds from their formulary list, or if they even have a formulary to control for this exact kind of problem. If the taxpayers are losing “hundreds of millions of dollars a month” because of these scams, that sounds primarily like a problem at Tricare in managing what most insurers do on a routine basis. Go after the doctors and compounders abusing the system to be sure, but perhaps taxpayer anger should be directed to what seems on the surface to be incompetent management of a basic prescription-plan management function — and serious thought given to ending this single-payer plan, too.