The Cost of Health Care Fraud

The below infographic from the folks at Compliance and Safety has some good information on the costs associated with health care fraud:

Via: Compliance and Safety LLC

The numbers here certainly add some perspective to the issue, but I have a couple thoughts.

1: I’m less impressed by the “government crackdown” than I infer the infographic creators to be. This is largely a government created problem (there can only be Medicare fraud if there is a Medicare), and the tiny amount recovered  through enforcement – appox. $5 billion per year assuming the numbers are through the end of 2011 -  barely makes a dent in the total at about 6% of the yearly loss, according to these numbers.

2: It is true that most Americans don’t understand their medical bills. If only it were due to a lack of effort. Americans don’t understand what they are paying for or why they owe what they owe because there’s little need for them to know. This is caused by the third-party payer problem. Simply put, patients aren’t the customers, and so the medical profession does not aim to serve them.

The customer is Medicare, or Medicaid, or the insurance (which functions more like pre-payment) that you got through your employer.  The first two are government programs, and the third is encouraged through market distorting tax credits. Health care providers tailor their billing process and communications to fit the needs of these customers, not patients. The solution to this problem is ending third-party paying and empowering patients to take command of their care.