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Home Publications Blogs Beat the Press Washington Post Reports Medicare Spent 0.14 Percent of Its Budget of Motorized Wheel Chairs, Much of Which Was Fraudulent

Washington Post Reports Medicare Spent 0.14 Percent of Its Budget of Motorized Wheel Chairs, Much of Which Was Fraudulent

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Sunday, 17 August 2014 07:46

The Washington Post had a major front page story reporting on scammers pushing unneeded motorized wheelchairs to seniors. Medicare pays roughly $5,000 for each chair, which allows for a large profit to suppliers as well as payments to intermediaries who would push the chairs to people who did not need or want a motorized wheelchair.

The piece is a useful exposure of a major scam operation, however it never puts the cost of the scam in a perspective that would be meaningful to most readers. At one point it tells readers that Medicare spent a Really Big Number ($8.2 billion) on these motorized wheelchairs since 1999. It would have been helpful to inform readers that this amounted to 0.14 percent of the $5.8 trillion that Medicare paid out over this period. 

Of course not all of the payments were made for unnecessary wheel chairs. If 60-70 percent of the wheel chairs were not needed, then fraudulent sales would come to roughly 0.1 percent of Medicare spending over this period.

This is hardly a trivial sum, but by failing put the numbers in context readers may wrongly be lead to believe that the Medicare program is grossly inefficient because of such scams. In fact, because the program has much lower administrative costs than the private sector (@ 2 percent for Medicare compared to 15-20 percent for private insurers), the country is still saving an enormous amount of money because the government is providing Medicare rather than private insurers.

If administrative costs were at the level of the insurance industry, Medicare would have cost between $600 billion and $900 billion more since 1999. It is also worth noting that private insurers are also often victims of scams.

 

Note: The figure for administrative costs for Medicare refers to the traditional fee for service Medicare program. Parts C and D, which are administered by private insurers, have considerably higher costs.

Comments (12)Add Comment
Tiny percentages are still large amounts
written by Bill H, August 17, 2014 9:09
I don't get your fetish for avoiding alarming the public. Let's not scare them with these big numbers of their money that is being wasyed, let's present it as tiny little numbers so that they won't be scared, won't care, and maybe we won't have to do anything about it due to public pressure. Then we can maintain the status quo and keep wasting $8.2 billion per year because we have presented it in a manner which made people not care that it is happening. Who gains by that other than the thieves?
WaPo Goes Tabloid
written by Last Mover, August 17, 2014 9:24

Recall Medicare Part D that prohibited the government from negotiating drug prices that makes wheelchair fraud look like a rounding error.

WaPo went tabloid long ago with such matters, reporting trivial petty fraud to represent the big picture. It took something like the $84k cost of the Sovaldi Hepatitus drug to even jolt sock puppets from their stupor.

Ignoring economic fraud on a massive scale works because much of it is about prices you can't see, not the ones you can - and that's what reporting should be about. But waPo and the rest are not really in the reporting business as much as the tabloid business, as in:

CLICK HERE TO LEARN WHY YOUR TAXES WENT UP AFTER MEDICARE STARTED PAYING FOR BLOODLETTING LEECH TREATMENT!
To Bill H
written by EMichael, August 17, 2014 9:45
Did you actually read the article?

It would appear not, as you state, "I don't get your fetish for avoiding alarming the public" when the article states:

"I don't get your fetish for avoiding alarming the public".

Followed further by you stating, "Then we can maintain the status quo and keep wasting $8.2 billion per year" when the article tells you that the waste was:

"At one point it tells readers that Medicare spent a Really Big Number ($8.2 billion) on these motorized wheelchairs since 1999."

You are only 14 years off. Which clearly demonstrates the effects on the weak minded by the devious reporting to big numbers by the media.





"The piece is a useful exposure of a major scam operation
Correction of post
written by EMichael, August 17, 2014 10:04



I need more coffee. The post should read:

Did you actually read the article?

It would appear not, as you state, "I don't get your fetish for avoiding alarming the public" when the article states:


"The piece is a useful exposure of a major scam operation"


Followed further by you stating, "Then we can maintain the status quo and keep wasting $8.2 billion per year" when the article tells you that the waste was:

"At one point it tells readers that Medicare spent a Really Big Number ($8.2 billion) on these motorized wheelchairs since 1999."

You are only 14 years off. Which clearly demonstrates the effects on the weak minded by the devious reporting of big numbers by the media.

...
written by JDM, August 17, 2014 10:50
Another way to visualize what kind of money this is is to ask how much per US citizen it is. If, as Dean hypothesizes, it's 60-70% of the total that's about $3 per citizen (maybe as much as $9 per taxpayer) over 15 years. So we're talking about perhaps as much as 20-60 cents per year. Go after it, sure, but should your budget priority be putting a stop to well under a dollar a year going missing?
...
written by JDM, August 17, 2014 10:56
BTW, sorry but I just realized that the tiny amounts I used in my above post are wrong. The actual numbers are around half that.
Here's a number that doesn't bother Hiatt and company at all
written by ifthethunderdontgetya™³²®©, August 17, 2014 7:09
.
THREE TRILLION DOLLARS

http://threetrilliondollarwar.org/

They happily shilled for this war, and continue to shill for every prospective war that comes down the pike.

To hell with the War Criminal Post.
~
Medicare Paid or Greedy/Exploiting Businesses?
written by James, August 17, 2014 11:52
Yes, Medicare paid $5K for unnecessary medical equip but who benefits? It's the donor and contributors to Chamber of Commerce, i.e., medical suppliers.

Medical suppliers are often praised by GOP's as job creators and they need all kinds of breaks.

Why don't we provide the resources for strong supervision and punishment then? No, no, no, you cannot do that bc that will intimidate the medical suppliers AKA job creators.

Remember former Sen. Fred Thompson who vociferously criticized gov't for everything.

BTP folks are well-informed so most if not all of you have seen or read that Thompson has in recent years doing ads on TV promoting reverse mortgages to seniors.

One of the biggest things he tout is the product is gov't insured! Say what? You said gov't has no roles in a free market but yet, you are promoting the gov't insured as the BEST thing?

What another typical GOP hypocrite!
ITo EMichael
written by Bill H, August 18, 2014 8:19
Did you read my comment? Apparently not, because if you had and had understood what I wrote youwould have gotten that it was not about the numbers, or about the article at all. It was about Dean Baker's insistence that we should never use big numbers without offsetting the impact of their bigness by pointing out that they are a tiny percentage of overall spending. This is the economist's role; to assure the public that the status quo is working and that it is not time to run for the fire exits. It is manipulative and false.
I did read it, Bill
written by EMichael, August 18, 2014 10:07
Nowhere does Dean Baker say the status quo is working. In fact he says "The piece is a useful exposure of a major scam operation" and "This is hardly a trivial sum."

The problem is the perception given by the way the numbers are reported. And the proof that this perception created "by failing put the numbers in context readers may wrongly be lead to believe that the Medicare program is grossly inefficient because of such scams" spreads disinformation is contained in your post, where you claim that 14 years of fraud is one year of fraud.

...
written by watermelonpunch, August 18, 2014 1:08
There's a scooter company in my region. They didn't get in any trouble with Medicare that I know of. But they did sell to companies like The Scooter Store, which did.
They were doing fantastically for awhile, and I heard it was once a great place to work. But for several years now have done waves & waves of layoffs.

On the whole, I think the biggest tragedy in this story is not that there was fraud, not that there was government waste, and not that there was a boom & bust based on those things... though all those things are bad.

The biggest tragedy is that a lot of people were given scooters that they not only didn't need, but reportedly have adversely effected some people's health.
Of course scooters are a WONDERFUL tool for people with conditions where they really need them.
But many people who were given scooters in this whole debacle, may have been much better off had they not had a scooter to use all the time.
fight fraud, not those exposing fraud
written by tew, August 19, 2014 3:52
A couple of things:

First, when discussing fraud we should understand how it can be addressed. If one fraud is $X and another is $10X, but the former is very easy to address while the latter is extremely diffuse, hard to detect, and hard to prove, then it may make sense to attack that former, smaller fraud while looking for structural changes to reduce the likelihood of the latter.

Second, if we apply a big enough denominator we can make any number look small.

Third, perhaps instead of freaking out whenever someone exposes government-related fraud, you should embrace it and work with them to crack down on the fraud (in a way that makes sense). If you believe in government, then believe it can be effective and fair.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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