The Health Care Racket

By Ralph Nader, CounterPunch

03 February 12

ooking at millions of individual bills that makeup the 2.7 trillion dollars of annual health care costs opens a gigantic window on the massive waste, redundancy, profiteering, fraud and sometimes criminal over-billing.

Here is a partial example of what I mean, in the words of Philip M. Boffey, the estimable science writer for the New York Times:

“Why does an appendectomy in Germany cost roughly a quarter what it costs in the United States? ($3,285 compared to $13,123). Or an MRI scan cost less than a third as much, on average, in Canada? ($304 compared to $1,009).

“Americans continue to spend more on health care than patients anywhere else. In 2009, we spent $7,960 per person, twice as much as France, which is known for providing very good health services. And for all that spending, we get very mixed results—some superb, some average, some inferior—compared with other advanced nations.”

Moreover, France and Germany, Italy, England, Canada, Belgium, Sweden and all other western countries plus Japan and Taiwan cover almost all their citizens, unlike the U.S. where 50,000,000 people are uninsured.

Boffey, who wrote a book on the National Academy of Sciences, (The Brain Bank of America: An Inquiry into the Politics of Science), under our sponsorship in 1975 goes on to cite the comparative price report of the International Federation of Health Plans in 2010. They are stunning! For Britain, Canada, France, Germany and the U.S. respectively, the average cost in dollars for bypass surgery is $13,998, $22,212,

Boffey adds other explanatory factors. These include higher administrative costs to deal with insurance paperwork, higher insurance company profits and executive compensation and less developed electronic health records leading to costly errors.

Except for Germany there are somewhat longer waiting times for some patients to see a specialist in these countries. But in the U.S. seeing specialists is often prohibitively expensive, and if you cannot afford such services, that is the longest waiting time of all.

A recent commentary in the Mayo Clinic Proceedings last August by Charles. W. Slack and Warner V. Slack, MD suggests another compelling comparison—between outcomes in different states in the U.S. They ask “why, for example, do Mississippi, Louisiana, and Georgia have such a high rate of mortality amenable to health care when compared with Idaho, Oregon and Washington.” Wide differences between states and counties have been documented regarding the cost of identical operations, frequency of operations such as cesarean sections or hysterectomies and other surgical disparities studied under controlled variables.

Health care bills come with hefty levels of fraud. From the historic study twenty years ago by the then General Accounting Office of the Congress to the present estimates by the nation’s leading expert in this field, Professor Malcolm Sparrow at Harvard University, fully ten percent of all health care expenditures are the result of computerized billing fraud and abuse. That will be $270 billion this year.

Dr. Sparrow, an applied mathematician, says it could be higher if the federal government would simply do a more detailed study. He adds that the enforcement budget should be one percent of the estimable volume of fraud. In actual practice, the enforcement budget is less than one/tenth of one percent, even though every dollar of enforcement brings in at least seventeen dollars back. (See Dr. Sparrow’s website:http://www.hks.harvard.edu/fs/msparrow/ )

Obviously the corporate fraud lobby is stronger than the taxpayer/consumer lobby in Washington, D.C. But why the health insurance companies, a formidable force in their own right when it comes to protecting its turf against single payer or full Medicare insurance (see singlepayeraction.org) do not do more to stop fraudulent billing practices, is a puzzle.

All in all, the health care industry is replete with rackets that neither honest practitioners or regulators find worrisome enough to effectively challenge. The perverse economic incentives in this industry range from third party payments to third party procedures. Add paid-off members of Congress who starve enforcement budgets and the enormous profits that comes from that tired triad “waste, fraud and abuse” and you have a massive problem needing a massive solution.

So, voters, why not start challenging all candidates for elective office to make this vast daily heist a front burner campaign issue.

Ralph Nader is a consumer advocate, lawyer and author. His most recent book - and first novel - is "Only the Super-Rich Can Save Us." His most recent work of non-fiction is "The Seventeen Traditions."