December 1, 2007

Hillary’s ‘$50 Billion to Avoid Paying Claims’ Is a Claim Debunked

Journalism’s defenders often describe it as a profession or craft unto itself, and minimize the importance, or even sometimes the relevance, of subject matter expertise.

That lack of subject matter expertise, and the apparent unwillingness to seek out a source of that expertise when necessary, probably explain how a Hillary Clinton whopper has survived on the campaign trail for so long.

In a subscription-only op-ed in today’s Wall Street Journal (bolds are mine), Merrill Matthews of the Council for Affordable Health Insurance does the job that Old Media campaign chroniclers haven’t done:

Earlier this week, campaigning in New Hampshire, presidential candidate Hillary Clinton asserted that health insurance companies spend $50 billion to avoid paying claims. “This is all part of their business model,” she was quoted as saying. “This is how they make money, but it’s so bad for the rest of us. I say to them, use the $50 billion to actually take care of people.”

Statements like these raise real questions about Sen. Clinton’s grasp of the facts.

….. Currently, the private sector health insurance industry spends about $600 billion a year paying traditional health care claims for those under age 65. According to a major actuarial firm, the industry spends roughly $30 billion a year adjudicating those claims — not “denying” them, but evaluating and processing them. There doesn’t seem to be a solid number for the amount of claims actually denied, but several health actuaries estimate that amount to be around $3 billion.

Regardless of Mrs. Clinton’s insinuations, however, the money spent evaluating claims is not wasted, and would not be better spent “taking care of people.”

An Associated Press report by Holly Ramer indicates that this is not the first time Mrs. Clinton has filed this bogus claim with America’s voters (bold is mine):

Clinton repeated a statistic she cites often—contending that insurance companies spend $50 billion a year figuring out ways to avoid paying claims.

There’s no way to get from Mr. Matthews’ stats to anywhere in the neighborhood of Mrs. Clinton’s $50 billion figure. There’s also no way that someone with a background in financial analysis would have failed to scrutinize her claim for as long as Old Media’s journalism “professionals” have.

For an object lesson in the truth of the last excerpted paragraph from Mr. Mathews above, and in how misguided and numerically challenged Mrs. Clinton is, consider that the estimated fraud rate in Medicare alone in 2001 was 6.3% (scroll down to Section 1.2 at the link). As to Medicaid — yikes. In 2005, the New York Times reported that Medicaid fraud in the Empire State alone “May Reach into (the) Billions.”

How rampant fraud against Medicaid and Medicare has become, and why there’s little reason to believe that the somewhat dated statistics just cited have improved, is exemplified in this anecdote Mr. Matthews recites later in his column (bold is mine):

Last summer, the Centers for Medicare and Medicaid Services (CMS), the agency that administers the country’s two largest insurance programs, announced a pilot program to investigate fraud in the medical device industry. Law enforcement officials, for example, visited 1,600 businesses in Miami that were billing Medicare for services. One-third of them didn’t even exist, yet they billed Medicare for $237 million in the previous year. The government has now charged 120 people in 74 cases, and Medicare filings in the area are down by $1.4 billion from last year.


  • So how many years were taxpayers funding over $1 billion annually in fraud — in just one metro area — before the arrests?
  • If this is a “pilot” program, how much fraud hasn’t been caught in the rest of the country?
  • Does anyone really think that a private insurance company competing against other companies would allow itself to be bilked to this extent?

Finally, will anyone in the press either call Mrs. Clinton on her “$50 billion to avoid paying claims” assertion (regardless of whether she continues to make it), or note its disappearance, if that indeed happens, as a result of Mr. Matthews’ column?

Cross-posted at


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