Medicaid Fraud Reconsidered

A year ago, Senator Frank E. Moss of Utah made headlines when he revealed that he and some of his staff members had posed as patients in New York City “Medicaid mills,” where they received unnecessary tests and treatment. In his press conference the Senator suggested that Medicaid fraud might be costing the City $300 million a year, or half of what the deficit-plagued municipal government contributes to the program. Subsequent stories in the press detailed the misdeeds of what the New York Daily News dubbed “Medidocs.”

Nearly everyone will agree that the Medicaid program as now administered costs too much. But, contrary to what was implied in the Moss hearings, the great bulk of Medicaid payments i...