Health Insurance Companies Invest Government Medicare Payments before Using Them

[The Straight Story]

Health Insurance Companies Invest Government Medicare Payments before Using Them

Friday, January 21, 2011 Medicare, one of the most costly U.S. government programs, has been paying health insurance companies in advance of medical services, allowing them to profit from this practice by investing the money.

By “playing the float,” insurers collected $376 million from investment income in 2007, according to an audit by the Department of Health and Human Services’ inspector general.

Consequently, the government is missing out on new revenues of its own if it were to pay after medical services are rendered. For instance, had Medicare in 2007 held onto the money it distributed in advance, and put the funds into long-term Treasury securities, the program would have had an additional $450 million in interest income.

http://www.allgov.com/Where_is_the_Money_Going/ViewNews/Health_Insurance_Companies_Invest_Government_Medicare_Payments_before_Using_Them_110121

[DURHAM D]

1. what a poorly written article