We Must Stop the Rampant Fraud in the Health Care Industry

What we have
seen over the last several decades is the systemic fraud perpetrated by private
insurance companies, private drug companies, and private for-profit hospitals
ripping off the American people and the taxpayers of this country to the tune
of many billions of dollars.

The rampant
fraud is another reason why our current health care system, dominated by
private insurance companies, is the most costly, wasteful, complicated and
bureaucratic in the world. Its function is not to provide quality health care,
but to make huge profits for those who own the companies. With 1,300 private
insurance companies and thousands of different health benefit programs designed
to maximize profits, our country spends an incredible 30 percent of each health
care dollar on administration and billing, exorbitant CEO compensation
packages, advertising, lobbying and campaign contributions. Public programs like
Medicare, Medicaid and the VA are administered for much less.

In recent
years, not only have we seen massive fraud by the health care industry, but we
also have been paying for a huge increase in health care bureaucrats and bill
collectors. Over the last three decades, the number of administrative personnel
has grown by 25 times the number of physicians.  Doctors and nurses in Vermont have described
to me in painful detail the amount of time and money they are forced to waste
negotiating with insurance companies about how they can treat their
patients.   

Not
surprisingly, while health care costs are soaring, so are the profits of
private health insurance companies. From 2003 to 2007, the combined profits of
the nation's major health insurance companies increased by 170 percent. And the
top executives in the industry are receiving lavish compensation packages –
averaging $14.2 million for the top seven companies. 
     

On top of all
of this, a review of court records and other public documents shows that
billions more dollars are being lost to fraud and outright corruption.  Importantly, this is not the case of "one bad
player" acting illegally.  This is a
situation where fraud appears to me part of the normal business model.  It is the rule and not the exception.    

There is
example after example indicating that virtually all of the major pharmaceutical
companies, insurance companies and private hospital chains have been involved
in massive health care fraud over the past decade.

Health and
Human Services Department investigators earlier this year found that 80 percent
of insurance companies participating in the Medicare prescription drug benefit
overcharged subscribers and taxpayers by an estimated $4.4 billion. 

There also
have been major criminal and civil cases against many of the leading corporate
health care providers in the country, including:

In 2004,
Warner-Lambert, a division of Pfizer Inc., pled guilty to two felonies and
agreed to pay $430 million for fraudulently promoting the drug Neurontin.

In 2003,
GlaxoSmithKline paid $88 million in civil fines for overcharging Medicaid for
its anti-depressant Paxil.

In 1999,
Hoffmann-LaRoche paid a $500 million criminal fine for leading a worldwide
conspiracy to fix prices for certain vitamins.

In 2009,
UnitedHealth, a leading insurance company, paid $350 million to settle lawsuits
brought by the American Medical Association and other physician groups for
shortchanging consumers and physicians for medical services outside its
preferred network.

In 2009, the
Centers for Medicare & Medicaid Services barred WellPoint, a major
insurance company, from participating in Medicare Part D because WellPoint has
"demonstrated a longstanding and persistent failure to comply with CMS's
requirements for proper administration..."  

In 2000, the
Hospital Corporation of America
agreed to pay $745 million to settle civil charges that it systematically
defrauded Medicare, Medicaid and other federally-funded health programs.

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