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Letter From the Editor: What You Could Buy With $60 Billion of Missing Medicare Funds

Introducing the January/February 2016 print issue of Pacific Standard.
Behind the scenes of this issue's cover shoot. (Photo: Devon Hutchins)

Behind the scenes of this issue's cover shoot. (Photo: Devon Hutchins)

More than five million hip prostheses. Nearly 2.2 million angioplasties. Close to 800,000 bypass surgeries.


That’s what you can buy with $60 billion in the American health-care system, according to data collected for the International Federation of Health Plans’ annual report. The report looked at the cost of routine procedures and found that, in the United States, you’ll pay a lot more than you might elsewhere. In the Netherlands, $60 billion would cover close to four million bypass surgeries, or nearly five times as many as it would in the U.S. You could perform as many as 11.4 million angioplasties in Argentina for the price of just 2.2 million here.

“We have looked here at a number of procedures and products which are identical across the markets surveyed,” explained Tom Sackville, IFHP’s chief executive, in an announcement accompanying the report. “The price variations bear no relation to health outcomes: they merely demonstrate the relative ability of providers to profiteer at the expense of patients, and in some cases reflect a damaging degree of market failure.”

But that’s just one way America’s health-care system is failing us. And just one way that providers are profiting at the expense of patients. While $60 billion for five million hip prostheses may sound unnecessarily expensive, that’s five million more than you can buy when the $60 billion goes missing.

And that’s exactly how much money Medicare lost to improper payments in 2014, according to conservative estimates made by the government. For the tens of millions of Medicare beneficiaries, Joe Eaton writes in “Glitch in the Machine,” “this can mean receiving unnecessary, and in some cases dangerous, tests and procedures. For the rest of us, it means wasted taxpayer dollars that could be invested in the program, which is funded in part by a trust fund projected to run out of money in 2030.”

Is there a way to fix this problem?

Ignoring the critics, Medicare officials are doubling down on Big Data and following the lead of the credit card industry, which has a much better record of rooting out fraud. Pundits have been talking for years now about the potential of Big Data to solve some of the world’s most complicated problems, from improving public safety to overcoming fertility issues. Now, officials believe, Big Data can be used to fight big fraud.

Will they succeed? They failed the first time—read Eaton’s report to understand why. But the insurance program’s staff is at work on a second fraud detection system. We’ll keep an eye on that project as it develops; follow along at for this and other rigorous coverage of the American medical system.


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