Does federal government regulatory oversight work?
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Does federal government regulatory oversight work?

Washington : DC : USA | Feb 12, 2013 at 12:05 PM PST
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Democrats and Republicans differ in at least one basic philosophical way. Democrats encourage strong federal oversight through regulation, and Republicans do not, asserting that too much government interference restricts business.

A new report from the Department of Health Services demonstrates government regulatory bodies do make a difference in the efficient and lawful implementation of government programs, in this case with Medicare and Medicaid.

The federal government recouped a record $4.2 billion through health care fraud investigations in 2012, according to a report released Monday by the Department of Justice and HHS, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 2/11).

The recovered funds came from the more than 1,100 criminal health care fraud investigations and 900 civil investigations launched in 2012. More than 800 individuals were convicted of fraud-related crimes in the criminal cases, according to the Department of Justice report.

Overall, the Health Care Fraud and Abuse Program (HCFAP) have recovered more than $23 billion in Medicare funds since it was created in 1997 (AP/Modern Healthcare, 2/11). Recent efforts have increased the amount of fraudulent payments the federal government has recaptured.

The HCFAP has doubled the amount of money recovered from fraud and abuse in the last four years at $14.9 billion. For every dollar spend investigating fraud in Medicare and Medicaid the federal government has reclaimed $7.90, which is the highest three-year average return since HCFAP's inception (Kelly, Reuters, 2/11).

The increased oversight is a result of the antifraud task force created in 2009 as one of the provisions by the Affordable Care Act, which addressed the estimated $60 billion in losses each year to Medicare fraud. ("Money & Co.," Los Angeles Times, 2/11).

Regulation by Democrats has an historic base

Approved by Congress on February 4, 1887, the Interstate Commerce Commission was the first regulatory agency formed by the federal government. Democrat President Grover Cleveland was in office at the time. He was a bit of an enigma, because he was known as a reformer and conservative, making him an icon for American conservatives of his time. But he was also renowned for his honesty, independence, integrity, common sense and commitment to classical liberalism, which appears incongruous with conservatism. Nevertheless, the nation’s regulatory practices began with his administration. This also shows how far afield conservatism and liberalism have grown in a little over 100 years. Still, the reasons for regulation remain basically the same now as they were then.

The railroads were the first industry subject to federal regulation in response to the public’s demand that operations be regulated in the years following the Civil War. A five-member enforcement board known as the Interstate Commerce Commission was created. Railroads were privately owned and operated without government regulation or oversight and monopolized areas in which they operated. The railroad monopolies had the power to set prices, exclude competitors, and control the market in several geographic areas. Cleveland did, however, side with George Pullman during the Pullman labor strike in 1894, but that’s another essay.

Does this sound familiar? If insurance companies and the banking industry entered your mind, you are correct. There is a fine line between free enterprise and responsible regulatory practices. President Obama’s regulatory chief, Cass Sunstein, was criticized by some groups and resigned in 2012.

Before leaving, Sunstein gave a YouTube lecture summarizing the efficacy of regulation and the dollars and human lives saved by regulatory protections in health and safety.

Admittedly during his stint in office, Sunstein posited a controversial philosophy: Some rules were unnecessary and burdensome, and agencies needed to weed them out. Environmentalists became wary of his wide-reaching regulatory-reform initiative, arguing that he was playing into a Republican narrative of "job-killing" red tape. His Youtube “white paper” was an effort to set the record straight.

In the report to Congress, Sunstein compared total benefits minus costs of regulations at the end of the three years he served for Obama. The Obama administration realized $91.3 billion in savings, more than 25 times the amount saved under the George W. Bush and Bill Clinton administrations. Bush’s regulations provided a net benefit of $3.4 billion and Clinton’s provided $14 billion.

Does regulation work?

A perusal of history demonstrates regulation, indeed, works. Right from the beginning, with the creation of the Interstate Commerce Commission in 1887, the railroads were brought into compliance for safety and guarded against monopolies. The Affordable Care Act is aimed in a similar direction with controls of the insurance companies, fraudulent activities, and increased patient protections.

Not to be forgotten, the now inactive Glass-Steagall Act kept the separation between private and commercial banks. Enacted in 1933 during the Great Depression, it protected bank depositors from the additional risks associated with security transactions. The act was dismantled in 1999. Consequently, the distinction between commercial banks and brokerage firms was eliminated, and many banks owned brokerage firms for investment. The demolishment of the Glass-Steagall Act is believed to be the cause of the housing crisis in which many buyers were duped into loans that were sold for quick profit, leaving buyers with inflated payments they could not afford. Many economists call for re-enactment of Glass-Steagall to recover from an era of deregulation.

Resources:

http://www.californiahealthline.org/articles/2013/2/12/federal-health-care-fraud-probes-brought-in-record-42b-last-year.aspx#ixzz2KhyjMGoI

http://www.govexec.com/oversight/2012/08/obamas-regulations-save-lives-and-money-cass-sunstein-says/57298/

http://www.ourdocuments.gov/doc.php?flash=true&doc=49

http://www.investopedia.com/terms/g/glass_steagall_act.asp#ixzz2KiKNezXw

http://www.eenews.net/public/Greenwire/2012/08/03/1

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A new report from the Department of Health Services demonstrates government regulatory bodies do make a difference in the efficient and lawful implementation of government programs, in this case with Medicare and Medicaid.
Dava Castillo is based in Clearlake, California, United States of America, and is an Anchor on Allvoices.
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