Fraud costs government health care $60 billion a year

Victor Joecks

And by the government, I mean taxpayers, because you and I are paying for it. I wonder how much fraud there would be if government ran the entire health care system?

This story highlights a big difference between government and private health care. A government program can lose $60 billion a year, because there is no competitive pressure on government health care. If they run out of money they can get more from taxpayers or just cut service. And because they don’t have any competition, there’s really not a lot its “customers” can do.

If a private health insurance company was losing this much money to fraud, another company (that wasn’t burdened by massive fraud) would put them out of business.

This is especially true, because, as the AP reported this weekend, health insurance companies profit margins are quite small.

Health insurers posted a 2.2 percent profit margin last year, placing them 35th on the Fortune 500 list of top industries. As is typical, other health sectors did much better – drugs and medical products and services were both in the top 10.

The railroads brought in a 12.6 percent profit margin. Leading the list: network and other communications equipment, at 20.4 percent.