Medicare started modestly in 1965 with a $3.4 billion budget and was originally expected to reach $8.8 billion by 1990. Instead, the program has grown into a fiscal monster with annual expenses of $109 billion, the fourth largest item in the federal budget - after defense, Social Security and interest on the national debt.
Unfortunately, such a massive program involving some 35 million beneficiaries and tens of thousands of doctors, hospitals and private companies can be an invitation to fraud.Along with the outlay of $109 billion a year has come abuse, red tape, cheating and overbilling to the tune of a staggering $10 billion a year, according to congressional estimates. That loss amounts to 10 percent of all Medicare costs.
While they account for only a small portion of the loss, growing criticism has been directed at the durable medical equipment industry - the manufacturers and suppliers of hospital beds, wheelchairs and hundreds of other devices from crutches to exotic machines.
As the Common Cause lobby pointed out in a recent magazine article, there has been a rapid growth in the number of such companies, with most of their income being earned from Medicare payments. Along with the proliferation has come a rise in complaints of fraud and excessive charges, amounting to perhaps as much as $200 million a year in this field alone.
Given the massive amounts of money at stake and the fact that Americans who are older are an increasingly larger percentage of the population, the problems of Medicare abuse probably are going to get worse.
Yet in the face of this loss, Congress has short-sightedly tried to save money by slashing the funds for Medicare oversight, the watchdogs who identify, track and recover overpayments and fraud.
That is cutting money in the wrong place. If efforts to find and recover loses are curtailed, nothing is really saved, and the taxpayer ends up losing even more money.
For example, in fiscal 1989, the Health Care Financing Administration spent $358 million to catch fraud and overbilling. This investment saved Medicare about $4 billion. Yet in fiscal 1990, the watchdog program was reduced to $332 million, even though the Bush administration conceded that the immediate savings of $26 million would cost Medicare an estimated $500 million in fraud and overpayments. What kind of budgetary logic is that?
As Medicare needs continues to grow and Congress is squeezed even harder by budget deficits, every penny needs to be watched in this huge, expensive and complicated program. More money - not less - needs to be invested in keeping track of payments and making sure they are legitimate and justifiable
Medicare is supposed to promote better health care among elderly and disabled Americans. It is not supposed to be viewed as a gigantic cash cow to be mercilessly milked.