Elon Musk's Department of Government Efficiency (DOGE), is setting its sights on fraud and abuse within Medicare and Medicaid.
It's about time.
The two government programs have been cesspools of malfeasance, incompetence, and duplicity for too long. And the cost of all this corruption and waste has grown at a staggering clip in recent years.
For starters, consider that both programs publish an annual estimate of how much taxpayer money they spend on "improper payments."
Of course, "not all improper payments represent fraud or abuse," as the Centers for Medicare and Medicaid Services (CMS) is fond of pointing out.
But many represent exactly that.
The other instances of improper payment --- namely "overpayments, underpayments, or payments where insufficient information was provided to determine whether a payment was proper" — are hardly innocent mistakes. They're enormously costly.
In fiscal year 2024 alone, 7.66% of all Medicare fee-for-service payments were improper by CMS's admission, amounting to $31.7 billion.
The agency tried to frame this statistic as a victory, bragging that it marked "the eighth consecutive year this figure has been below the 10% threshold for compliance established by improper payment statutory requirements."
If getting 10% of its payments wrong is the standard for competence at Medicare, then Medicare needs to raise its standards.
This figure does not account for the fraud in other segments of the program, most notably Medicare Advantage.
This is the part of Medicare that allows seniors to opt for a privately run health plan instead of the traditional government-administered entitlement --- in principle, a defensible idea.
Unfortunately, there are too many examples of the government failing to police malfeasance by Medicare Advantage plans.
A 2024 Health Affairs study found that some Medicare Advantage plans were enrolling veterans who had access to Veterans Health Administration (VA) health benefits.
A substantial number of these vets got all their care through the VA; their Medicare Advantage plans didn't have to pay for anything.
But the MA plans still collected a capitated payment from the federal government for "covering" the veteran.
The cost of this corporate welfare for insurers was more than $1.3 billion in 2020.
Medicaid performs slightly better than Medicare on some measures, with an improper payment rate just over 5% for fiscal years 2022, 2023, and 2024.
But that figure still comes out to $31.1 billion — making the program almost exactly as wasteful as Medicare fee-for-service in terms of dollars and cents inappropriately spent.
Medicaid also has a track record of providing coverage to millions of Americans who aren't eligible for the program.
This is largely the result of COVID-19-era policies which prohibited states from determining whether enrollees were genuinely eligible for the program.
That policy was supposed to end in 2023.
But the Biden administration actively discouraged states from removing ineligible beneficiaries from their Medicaid rolls.
The result was that as many as 18 million people were enrolled in Medicaid who weren't eligible, according to a 2023 study by the Paragon Institute's Brian Blase.
These are just some examples of waste and fraud that have already been brought to light, whether by independent researchers or CMS itself. So just imagine what an institution like DOGE might discover if they take a closer look at these programs.
"Yeah, this is where the big money fraud is happening," Musk recently wrote on X in reference to Medicare specifically. That much has been obvious for years. The question is whether he and DOGE can root out new instances of inefficiency, perverse incentives, and deliberate misconduct — and do what's necessary to ensure that the taxpayer dollars they command are spent judiciously.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy -- and How to Keep It (Encounter 2025). Follow her on X @sallypipes. Read Sally Pipes' Reports — More Here.
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