For those of you like me, who never tire of reading about fiscal abuses and waste by the government, or perpetrated by those who work within its confines, a GAO report last week that detailed how Medicaid providers are abusing the tax system probably didn’t raise an eyebrow.

For me, that headline was comparable to a study I read while in college in which the government was determined to find out why inmates attempt to break out of prison.

Trust me, I can’t make this stuff up.

Nevertheless, the comptroller general’s report substantiated the fact that more than 30,000 Medicaid providers accrued more than $1 billion in unpaid federal taxes over the last fiscal year.

Abuse in Medicaid?

As the cheeky Captain Renault would remark in the classic film Casablanca, “Shocking!”

In its findings, the GAO selected some 25 Medicaid providers throughout California, Colorado, Florida, Maryland, New York, Pennsylvania and Texas — all states with high federal tax debts — and put them under the microscope.

The ensuing investigation uncovered rampant abuses, not the least of which was a systemic failure to pay both individual income taxes and payroll taxes to the IRS.


But wait! It gets better.

Individuals were found to be diverting the money to buy opulent homes and luxury vehicles. To exacerbate this situation some providers investigated by the GAO were sanctioned for substandard patient care, while receiving Medicaid payments that ranged anywhere from $100k to $39 million.

The Medicaid fraud issue assumes an even higher profile as GAO Comptroller General David Walker has labeled Medicaid along with its budget-depleting siblings, Medicare and Social Security, as a triad that is rapidly breaking the national bank.

Walker’s “Fiscal Wake-up Tour,” which has been profiled on such shows as “60 Minutes,” addresses the looming contagion facing the country as the first wave of the Baby Boomer generation prepares for retirement.

By the GAO's estimates, the aggregate cost of Medicaid, Medicare and Social Security exceeds projected revenue by more than $50 trillion over the next 75 years.

To put it another way, that's roughly 95 percent of the net worth of every American.

All kidding aside, that’s really shocking.

Thus far, the slate of 2008 presidential candidates has deftly sidestepped the issue, opting instead for largely unworkable tax reform and universal health care plans – the majority of which are overseen by Uncle Sam.


So you have a pending national budget crisis, rampant abuse in one of the major government programs, and policy platforms that above all will result in one absolute certainty — higher taxes.

That doesn’t sound like the start of a beautiful friendship.

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