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When something as big as Medicare makes decisions the consequences involve more than health care. For example, in April the Centers for Medicare and Medicaid Services (CMS) made a decision to increase funding to the private-sector Medicare Advantage program by $8 billion. That decision was worth billions to private health insurers, and as the Washington Post noted, in the weeks before the decision “hundreds of federal employees” were given advance word, leading to—surprise—a surge of stock trading. A full 436 employees at the federal Department of Health and Human Services got tipped off, along with others at the White House’s Office of Management and Budget. The information was the sort of access the average investor could never tap.
A government mouthpiece claimed that CMS takes the security and integrity of sensitive information “very seriously,” but evidently not serious enough. Hundreds of employees with advance notice of a policy decision is “way too many,” according to Brian Hall, of George Mason University’s Mercatus Center, a former commissioner with the Bureau of Labor Statistics, where employees with access to sensitive information are literally locked down and face severe fines and five years of imprisonment for early disclosure. In other parts of government, including Medicare, employees are not subject to those kinds of consequences.
Former Medicare director Thomas Scully was “not surprised” that hundreds had access. Taxpayers should not be surprised by his kind of insider trading by federal employees, who are compensated on average 16 percent higher than their counterparts in the private sector, according to the Congressional Budget Office, with benefits in some cases 46 percent better in government. So federal employees hardly need a profiteering perk on top of all that.
The overcompensated federal employees who traded with advance information are probably not surprised by the lack of oversight, nor by scant attention to the misconduct. The bigger government gets, the more it is subject to corruption. The only way to reduce such corruption is to make government smaller.