Over the next few months, Washington and the nation will engage in a vigorous debate over the Affordable Care Act and the future of health care in America. While there are lots of competing ideas about how best to make healthcare more affordable and accessible, this forum will be dedicated to identifying inefficiencies in Federal healthcare spending that also must be addressed. With over a quarter of the Federal budget budget devoted to healthcare, it is essential that whatever plan emerges addresses things like rampant program duplication, the billions of dollars lost to improper payments and fraud, and the failure to prioritize research spending. Indeed, you cannot have a serious conversation about the impact of debt or deficits on future generations without considering these facts.
The Department of Health and Human Services (HHS) is made up of many agencies charged with protecting the health of all Americans. This includes supporting medical research, promoting wellness, preventing and controlling disease, ensuring the safety of drugs and medical devices, and providing health care and related services.
The HHS budget exceeds $1 trillion and represents a quarter of the Federal government’s expenses. Medicare, which is administered through HHS, is the nation’s largest insurer, handling more than 1 billion claims per year, while Medicare and Medicaid together provide health insurance for one in four Americans.
At the start of every Congress, the Government Accountability Office (GAO) updates its “high-risk list” to include agencies and programs that are vulnerable to waste, fraud, and abuse, mismanagement, or are most in need for transformation. The 2015 high risk list included three programs under the HHS that were most vulnerable to the above criteria. The two list areas we will address are Medicare and Medicaid, as they are ripe for reform, and constitute a large portion of the HHS budget.
The Medicare program has been on the GAO’s “high-risk list” since 1990, “due to its size, complexity, and susceptibility to mismanagement and improper payments.” In fact, the Centers for Medicare Services (CMS) estimated in 2013 that improper payments in the program were almost $50 billion.
Some examples of these improper payments include overpayments to providers with criminal backgrounds worth $1.3 million, $358.8 million in Medicare payments for chiropractic services that did not comply with Medicare requirements, and Medicare Advantage improper payments estimated to be $14.1 billion.
The Medicaid program has also been susceptible fraud. Last year the program paid out an estimated $29 billion in fraudulent claims including payments to providers that had suspended or revoked medical licenses, had invalid addresses, were identified as deceased in Federal death files, or had been excluded from Federal health care programs.
The Affordable Care Act (Obamacare) has also been under the microscope for lack of fraud controls in its Federal Marketplace. GAO performed 12 undercover tests of the Marketplace, which focused on year 2014 phone or online applications. During these tests, the Marketplace approved subsidized coverage under the ACA for 11 of the 12 fictitious GAO applicants. In addition, according to GAO analysis of CMS data, about 431,000 applications from the 2014 enrollment period, with about $1.7 billion in associated subsidies for 2014, still had unresolved inconsistencies in the Marketplace as of April 2015.
If GAO’s concerns are addressed, billions could be saved in both of these programs, making Medicare and Medicaid better for those who use its services.
The National Institutes of Health (NIH) is also housed under HHS. The NIH is the nation‘s premier medical research agency, and is composed of 27 Institutes and Centers, which focus on specific research agendas or particular diseases or body systems. While the agency alone has a $32 billion budget, its leaders have criticized Congress in recent years for not being allocated enough funding for vaccine research for global outbreaks like Zika or Ebola. However, as Senator Jeff Flake has pointed out in a few of his oversight reports, the NIH may have its priorities mixed up when it comes to essential medical research.
In Senator Flake’s “Twenty Questions” report, the NIH granted funding to studies like, “do drunk birds slur when they sing?,” and “why does the face of Jesus appear on toast?” It would be hard to argue that these studies, totaling $8.5 million, are more of a priority than life saving vaccines for the Zika or Ebola viruses. We agree with Senator Flake when he says that, “by stopping unnecessary expenditures, more resources will be freed up for our true national priorities.”
Finally, like most government agencies, there is much needed cleaning up of its overhead and bureaucracy. For example, the recent GAO report that shed light on the Federal government’s billion-dollar public relations effort, shows that all agencies have some unnecessary overhead. The HHS in particular spent $114 million on public relations in 2015, second only to the Department of Defense ($590 million).
It should be clear that there are areas that can be trimmed back without harming any necessities in Federal programs. In fact, we think programs will serve Americans better when they become more efficient. We believe this is a great starting point to fix our nations healthcare and other Federal priorities. Not only will these reforms make the programs or agencies better, we will be well on our way to address our deficit.