Republicans exaggerate "waste, fraud and abuse" in Medicaid.

Most of Medicaid outlays are proper, and most of those that aren't usually result from bureaucratic error.

Among the many absurdities of the Trump Regime is the claim that Medicaid, the joint federal-state health insurance program, is riddled with “waste, fraud and abuse.” But if it’s such a serious problem, why did Trump eliminate the Inspector General responsible for rooting it out?

Of course, this is not the first time Trump’s words contradict his actions. Nor is it the first time Republicans have smeared a government program designed to help low-income Americans.

This time, “waste, fraud and abuse” is a theme to distract from the GOP’s full attack on health insurance for roughly 8.6 million low-income Americans. That’s how many Medicaid recipients would lose coverage under new conditions spelled out in Trump’s “Big Beautiful Bill,” according to the Congressional Budget Office estimates.

Trump reportedly has told House Republicans to keep their hands off Medicaid, except for the “waste, fraud and abuse,” but hard-liners want deeper cuts than the $880 billion already in the bill.

Rep. Andy Harris, the Freedom Caucus Republican from Maryland with 189,000 Medicaid beneficiaries in his district, frequently mentions “waste, fraud and abuse.” And Rep. Eric Burlison, Republican of Missouri with 172,000 Medicaid beneficiaries, says Republicans should not “leave all that fraud in the system.”

This is a whole lot of grandstanding.

While there is such a thing, some of what politicians call fraud are simply errors. Genuine fraud constitutes a small percentage of Medicaid outlays. That’s according to a deep dive in federal data by KFF, the nonprofit health policy research organization formerly known as the Kaiser Family Foundation.

Here are some of the key points the KFF made in a report on Medicaid integrity:

— What Trump and House Republicans call fraud might only be “improper payments” that result from bureaucratic missteps. It doesn’t mean the recipients of payments were not eligible for them; it means not all their paperwork was in order.

— “In 2024, Medicaid paid an estimated 94.9% of total outlays properly, representing $579.73 billion in proper federal payments,” KKF found. “The overall Medicaid improper payment rate was 5.1% (or $31.10 billion in federal payments). However, 79.1% of the improper Medicaid payments were the result of insufficient documentation or missing administrative steps.” So, according to my calculator, that would leave about $6.5 billion in other improper payments, and possibly fraud.

— KFF found that improper payments resulted from failures by state agencies to document a person’s eligibility or to screen enrolled providers; records might not have been submitted to support the medical necessity of a claim.

— “Other improper payments include payments for beneficiaries who were ineligible or were eligible but received a service that was not covered (15.6%), for providers not enrolled in the program (2.0%), and other monetary losses (3.3%).”

— When fraudsters are caught and convicted, the government often recovers the taxpayer losses. For instance, in 2023, when there was an Inspector General still on duty, government recoveries from Medicaid and Medicare fraud reached $3.4 billion. That worked out to about $2.80 for every dollar spent on prosecution. In 2024, state Medicaid fraud units reported 1,151 convictions and $1.4 billion in recoveries (or $3.46 for every $1 spent).

This is also from the KFF report:

“As the budget debate continues, there may be efforts to recast certain Medicaid policy changes, such as adding work requirements, … as addressing fraud, waste and abuse. There are proponents and opponents of such policies, and these policies may come with tradeoffs, but they are not about rooting out fraud in Medicaid.”