As a member of the Senate health committee, one of two Senate panels dealing with health care reform, it has become apparent to me that real health care reform must address the billions of dollars in fraud and abuse that comes from the major corporations 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.
It is absolutely imperative that real health care reform prevent major insurance companies, drug companies and hospital chains from perpetrating fraud and abuse on government health care programs and individuals, which are driving up health care costs in this country by billions of dollars every single year.
To me, the evidence is overwhelming that we must end the for-profit private insurance company domination of health care in our country and move toward a publicly-funded, single-payer Medicare for All system.
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