In 2011, Medicare and Medicaid made a combined $51 billion in improper payments, according to a new report from the Government Accountability Office. To put it another way, 6% of total spending in the two programs is wasted because of a) fraud and b) bureaucrats and contractors doing some of the same work.
Now, from 2013 through 2022, the government will spend roughly $12 trillion on Medicare and Medicaid, according to the baseline forecast from the Congressional Budget Office. Without reform, the two programs will waste roughly $720 billion if that 6% figure holds constant.
Now, that’s a lot of money. In fact, it’s almost the exact amount of revenue that would be gained by a) raising the top two income tax rates to 39.6% and 36% from 35% and 33%, and b) raising capital gains and dividend rates to 20% from 15%.