By MATTHEW HOLT

Two weeks in the past I wrote an April Idiot’s piece that claimed that Elon Musk and DOGE had been going to nationalize American well being care to avoid wasting cash. That piece was half-joking however full-serious. 

In the event you take a look at what Musk is complaining about there are two main areas of “waste, fraud and abuse” in authorities spending. 

One is individuals straight employed by authorities businesses. Most people I’ve ever met in authorities work rattling onerous and for a lot much less cash than they’d get within the non-public sector. However you may in fact discover tales about ineffective authorities bureaucrats, who don’t do any work and pad their expense accounts. These tales are most likely about as true as Reagan’s pink Cadillac driving welfare queen in that there’s some foundation in actuality for there being a tiny minority of unhealthy actors, however the politics has far outrun the reality. (BTW that Welfare Queen article by Josh Levin in Slate is outstanding and very lengthy!)

The opposite main space the place Musk claims to be discovering fraud is in work contracted out. There are in fact a lot of varieties of authorities work contracted out. If, like me, you’re sufficiently old to recollect the Iraq warfare, you most likely are considering of beltway bandits like Halliburton supplying any variety of companies to the army. (Bear in mind when the Cheneys had been baddies?). One other is the Blue Cross & Blue Defend plans who had been the unique contractors processing Medicare & Medicaid claims. Funnily sufficient they couldn’t truly ship on that so in flip they outsourced it to Ross Perot at EDS and others like ACS, later Conduent. However there’s a ton extra throughout each company.

Musk & DOGE have been working round in essentially the most ham-fisted manner possible, axing each precise staff–together with 20,000 of the 80,000 working at HHS– and allegedly slashing $150 billion in contracts. In fact on nearer examination, lots of the “contracts” had been already over, or had been made up. DOGE has been a pathetic piece of efficiency artwork that will be humorous if it hadn’t ruined so many careers of individuals doing nice work, or killed so many desperately poor kids in poor nations.

The intelligent individuals at Brookings, (Elaine Kamarck and Paul Gentle) in a detailed piece on the subject, got here up with an estimate of the ratio between direct staff and contractors.

As you may see the variety of civil servants (precise staff) has stayed about 2m for practically 15 years. The quantity of contractors has bounced round however been practically 2.5 instances that quantity. 

For the 4-5m jobs within the contract sector GAO has estimated that the 2023 value was a tad below $800 billion a 12 months, with 60% of that going to Protection.

Nevertheless, there’s a third class of presidency “contractors”. These are non-public firms offering companies to personal people for whom a 3rd social gathering is paying. Generally the third social gathering is the federal government, like CMS paying Medicare claims. Generally it’s a personal entity like an employer paying one other one, like a hospital–however the prices are sponsored on each side by the federal government. Or typically the identical transaction is each paid for by the federal government and a personal particular person, akin to Medicare paying for some prices whereas a personal Medigap plan pays for the remaining.

Musk and DOGE have principally ignored this.

You possibly can see the place I’m going right here. 

These should not “contracts” they usually don’t present up within the GAO’s evaluation. In the event that they did the overall can be nicely over $2 trillion in well being care alone. However they do characterize authorities spending.

And every single day in well being care there may be information about ways in which non-public firms are being “over- compensated” for what they supply for that spending. 

I’m not even going to speak about United HealthGroup and Medicare Benefit right here. In spite of everything, even the Trump DOJ appears to suppose they’re responsible of upcoding and fraudulent danger adjustment. 

However there’s loads of different examples

Caught with its hand within the cookie jar final month was the nation’s greatest Medicaid plan, Centene. Medicaid is a state-based program, so if somebody strikes from one state to a different, the state and Federal authorities are purported to cease paying the Medicaid plan in a single state, and as an alternative pay the plan in one other. Centene in fact is aware of this, however the WSJ discovered that it was telling its native plans to not inform the state that its members had moved away.

One Centene supervisor urged a few of the firm’s case managers in February to maintain Medicaid recipients enrolled after they moved. “Please DO NOT shut instances whenever you study a member has moved out of state,” the supervisor mentioned in a Microsoft Groups message. “If the member reveals eligible and are out of state, they will nonetheless can [sic] make the most of a few of the advantages.” Centene’s spokesman mentioned the corporate is required to keep up protection for members till the state decides whether or not to disenroll a beneficiary.

Centene was amassing about $150m a 12 months for these sufferers who weren’t even dwelling in its protection space, and mendacity to the taxpayer about it. The WSJ makes clear that they weren’t alone. United, AetnaCVS, Molina and Elevance had been all doing the identical factor. Good pure revenue if you will get it!

In semi-related information, a few of the extra corrupt states are becoming a member of in. As an example, Centene paid a $67m tremendous in Florida for overcharging Medicaid for its PBM companies. Presumably that cash ought to have gone again to the Florida taxpayer, however the regime in Florida instructed Centene to provide $10m of that cash to a darkish cash public “charity” that’s the pet venture of its founder, a Ms. Casey DeSantis. Who apparently is married to the governor of Florida and wish to be the subsequent one!

Look I do know you’re all shocked that Florida Republicans and their pleasant lapdog firms are concerned in this kind of corruption, nevertheless it’s potential that one thing not too dissimilar is occurring within the blue collar Democratic stronghold of Pittsburgh, PA.

There we discover one other kind of presidency “contractor”, the College of Pittsburgh Medical Heart. UPMC has been constructing an empire for many years. I’ve written about its main league baseball fashion govt salaries, and others have uncovered its company jets. However whereas UPMC has all of the affectations of an enormous for-profit company, Beckers studies that 70% of its income comes from authorities applications. However what benefit does being a non-profit deliver for UPMC that the remainder of Pittsburgh residents don’t obtain? Yup, no have to pay property tax. On the $2.1 billion-worth of land they personal.

So when the mayor of Pittsburgh comes asking for the town’s share, UPMC isn’t precisely taking the excessive highway.

To guard its standing, the hospital large is placing its thumb on the dimensions in Pittsburgh’s hotly contested mayoral race, during which the democratic major election is going down on Could 20. The incumbent, Ed Gainey, was elected in 2021 and has been a vocal critic of the medical heart’s rising portfolio of tax-exempt properties, alleging that the middle is misusing its nonprofit standing by granting tax exemptions to ineligible properties. The progressive mayor is dealing with a stiff problem from County Controller Corey O’Connor, who’s working because the best choice of the Pittsburgh growth and actual property communities, raking in money from native actual property moguls, longtime Republican donors, and notably, hospital board members. That features board members of the College of Pittsburgh Medical Heart and its related Youngsters’s Hospital Basis. All collectively, these members and their households have contributed at the least $25,000 towards O’Connor’s mayoral marketing campaign up to now this 12 months, in response to marketing campaign finance information. 

This doesn’t strike me because the conduct of a worthy impartial charitable group, and admittedly neither does the conduct of many different main well being care techniques. To cite myself (yeah, yeah, I do know its nonetheless plagiarism),

During the last 30 years America’s venerable neighborhood and parochial hospitals merged into massive well being techniques, largely to have the ability to stick it to insurers and employers on value. Blake Madden put out a chart of 91 well being techniques with greater than $1bn in income this week and there are about 22 with over $10bn in income and a bunch extra above $5bn. You don’t want me to remind you that lots of these techniques are responsible with excessive prejudice of monopolistic value gouging, screwing over their clinicians, suing poor individuals, managing big hedge funds, and paying dozens of executives like they’re taking part in for the quickly to be ex-Oakland A’s. Just a few acquired LA Dodgers’ fashion cash. 

Significantly galling is the sum of money sloshing round of their hedge funds. I’ve made a really, very tough estimate that there’s most likely $500 billion within the “reserves” of the large hospital techniques and the non-profit Blues plans, nevertheless it may be $1 trillion.

So what’s my reply?

Nationalize the lot of them.

If the hospitals and medical doctors had been a part of authorities businesses just like the VA or the US Marine Corps, all of this theft and corruption would both disappear, or be managed by OIGs and others. 

There’d be no want for them to have these hedge funds. Or the funds to personal insurance coverage firms. That cash may very well be used for good somewhat than revenue.

Salaries may very well be adjusted to replicate these paid to excessive paid public sector staff. If the President of the USA will get $400k a 12 months, why does the CEO of a regional medical heart want $14m? For that matter a scientific service line head on the VA could make as much as $400k a 12 months, which doesn’t sound loopy low. Clearly there must be a ton of changes which might most likely embrace making medical faculty free, however total being a doctor would nonetheless be a excessive paid career–as it’s in the remainder of the world. And we might return to them a ton of energy and autonomy that has been stolen from them by well being plans and directors.

Now I do know it will come as an anathema to most People. They’ll appropriately say that SpaceX (regardless of Musk being its nominal CEO) was capable of put rockets in orbit less expensive than NASA did.Which may be true in lots of areas of the financial system nevertheless it’s not true in well being care. We spend manner, far more per head than nations with government-delivered techniques. 

Lastly, a nationalized well being system would allow us to take away a few of the greatest inequities and idiocies in our present authorities primarily based insurance coverage system. Exhibit A is Medicaid. Having one Federal authorities program for individuals over 65 and the disabled (Medicare) and a completely totally different state-based one (Medicaid), which spends 1/2 of its cash on people who find themselves over 65 and disabled and who’re additionally within the Federal program is apparent silly and at all times has been.

A nationalized system would take away the second class standing of the ⅓ of our residents who don’t have Medicare or good non-public insurance coverage, and would allow our scientific professionals to observe drugs the best way they needed to after they had been younger and idealistic. 

Clearly getting American well being care from right here to there through nationalization–a British phrase from the Forties that hardly has any that means right here–is near unimaginable.

However inform me it isn’t the best factor to do. Even if you happen to solely care about decreasing waste, fraud and corruption.

Matthew Holt is the Founder, Writer and an Creator at THCB