American taxpayers and Medicare beneficiaries are victims of massive fraud.
The Government Accountability Office, a congressional watchdog agency, has recently estimated that taxpayers lost between $233 billion to $521 billion to fraudsters just between 2018 and 2022. Moreover, in 2025, congressional investigators reported that COVID-19 fraud in the unemployment insurance program alone amounted to $191 billion, and much attributable to transnational criminal organizations.
Fraudsters not only bilk taxpayers funding government programs, they also directly harm the patients dependent on them. Every dollar lost to fraud is a dollar lost to health and welfare benefits for eligible people.
Opportunities for theft are vast. Federal funds are often passed through state agencies, in the form of federal grants or allocations, amounting to a total of $1.2 trillion in 2025 alone. Since state agencies frequently oversee federal programs such as Medicaid, shortcomings at the state level can exacerbate issues related to fraud that negatively impact taxpayers and individuals who rely on these services.
Fraud problems beset virtually every state. But federal investigators emphasize that there are “hot spots” for this criminality. California and Minnesota are clearly hotbeds of fraud, and President Trump’s ongoing investigations there and elsewhere will likely show that the levels of corruption and the loss of billions of dollars in taxpayers’ money are significantly worse than reported thus far.
Targeting Medicare. Medicare, the massive $1.1 trillion program, provides health services to seniors and certain disabled citizens. As Rep. Jason Smith, chairman of the House Ways and Means Committee, has noted, Medicare loses about $60 billion dollars, equivalent to $858 per beneficiary yearly, to waste, fraud, and abuse.
While there is doubtless fraud in the Medicare Advantage program, the system of private health plans that serves as an alternative to traditional Medicare, the Medicare Payment Advisory Commission has notdetermined, quantitatively or otherwise, that Medicare Advantage overpayments are a result of deliberate fraud. In fact, overpayments in that program are mostly rooted in profoundly flawed insurance payment and risk adjustment systems, such as the legally required prospective coding of patients’ medical conditions that secure higher reimbursement.
Today’s complex, highly bureaucratic, policy governing Medicare Advantage payment is both outdated and wasteful. Presidents Clinton and Obama, along with analysts at the American Enterprise Institute and Heritage Foundation, have supported straight market-based bidding, disentangled from traditional Medicare’s administrative pricing system, to set health plan payments and reimburse plans for actual beneficiary health costs. That would be a much simpler and better solution.
Meanwhile, traditional, fee-for-service (FFS) Medicare is a top target for fraudsters. The reason: the General Accounting Office calls it a complex, high-risk program, noting that “Fraud schemes in traditional Medicare often focus on certain services, such as durable medical equipment. Fraudsters may use stolen or inappropriately obtained Medicare beneficiary identifiers to submit fraudulent claims for unneeded or never provided services.”
Chris Deery, a fraud investigator for Independence Blue Cross of Pennsylvania, recently confirmed the Office’s assessment in sworn testimony before the House Ways and Means Committee, saying “These networks are exploiting a simple reality: the structure of the fee-for-service Medicare system makes it inherently vulnerable to fraud.” The FFS model pays claims upfront, as Deery notes, and only attempts to recover payments afterward, and maybe never.
Durable Medical Equipment. Medicare routinely pays for such items as braces, catheters, glucose monitors, wheelchairs, and various other kinds of medical equipment for beneficiaries. In the total scheme of things, Medicare’s Durable Medical Equipment program is relatively small, but it has been a top target from fraudsters, including domestic and international criminal organizations. Their typical method involves establishing temporary dummy corporations or shell companies to submit Medicare reimbursement requests for beneficiaries, utilizing stolen patient identifiers and falsifying medical condition documentation. In one case, the Government Accountability Office reported that fraudsters secured over $4 billion in payments for undelivered urinary catheters. Like other incidences of Medicare fraud, the bilking of taxpayers in this program is geographically concentrated, notably in South Florida and Southern California.
The Hospice Program. Hospice services for end-of-life care are offered by traditional Medicare, though not Medicare Advantage. Dr. Mehmet Oz, Medicare Administrator, stopped Medicare payments to 450 suspicious hospice organizations in California alone. In Los Angeles County, home to 1800 hospice organizations, 89 of these organizations had an address in just one building. Shelia Clark, President of the California Hospice and Palliative Care Association, recently told Congress, “California is the clearest current case study of what happens when oversight weaknesses are exploited at scale. The warning signs included explosive providers’ growth, troubling survey findings, excessive clustering of hospices and home health agencies, unusually long durations of service, and patterns inconsistent with ordinary clinical reality. Those signals should have prompted earlier intervention.”
The Home Health Program. Medicare pays approximately $16 billion to 10,000 home health agencies serving 2.8 million beneficiaries. The payment is made to home health agencies who are required to provide documentation for those services. Historically, the program has been a fat target for fraudsters. Their schemes include billing for undelivered services, issuing fake certifications, falsifying medical records or exaggerating patient assessments, and participating in kickback arrangements for marketing home health services. In fiscal year 2015, the Office of Inspector General at the U.S. Department of Health and Human Services categorizedmore than half of Medicare spending on the program as “improper payment.”
The good news is that Medicare’s home health fraud metrics have been showing a marked decline. While there has been a notable decrease in “improper payments” in recent years, the recent House Ways and Means Committee hearing shows that this program remains a vulnerable target for fraudsters. In California, for example, since 2024, home health agencies grew from 655 to 1800, with total payments reaching $1.7 billion. In New York, according to Rep. Claudia Tenney, over the period 2020 to 2024, just one doctor billed Medicare $600 million in home health payments.
Team Trump’s Response. The Trump administration has made the crackdown on massive fraud in government programs, especially Medicare, a top priority. Vice President JD Vance will coordinate the administration’s efforts across the federal agencies and departments, while Assistant Attorney General Colin McDonald is heading up the newly created National Fraud Enforcement Division for the Department of Justice. Thus far, the Trump administration, according to House Ways and Means Chairman Smith, has secured $15 billion in taxpayer savings, while charging over 300 people with criminal fraud.
In 2025, the Trump administration launched the Fraud Defense Operations Center, providing the Center for Medicare and Medicaid Services (CMS) with analytic tools to identify fraud and halt Medicare payments to questionable vendors in real time. Recently, the CMS further expanded its anti-fraud efforts and created the “Crush” program, designed to tighten up vendor eligibility and preclude Medicare participation of questionable operators.
Trump is tough. But without strong bipartisan cooperation from state and local officials, the President’s task will be even tougher. Fighting fraud should not be a partisan issue.
Robert E Moffit is a Senior Research Fellow at The Heritage Foundation, and co-editor of Modernizing Medicare: Harnessing the Power of Consumer Choice and Competition, published by Johns Hopkins University Press.
