The Trump administration has made fighting Medicaid fraud one of its top priorities. It has launched major criminal investigations and promised a sweeping crackdown on waste, fraud, and abuse.
Now, a newly released report suggests the massive problem is more widespread than previously understood.
The recent news about the Trump administration withholding as much as a billion dollars in Medicaid funding to California and Minnesota unless those states undertake major reforms has captured breathless headlines in the progressive media.
But it just goes to show that the journalists and editors of those publications apparently care nothing about the Affordability Crisis, which has been fueled by endless, wasteful government spending.
The Paragon Health Institute on Tuesday published a major new analysis estimating that nearly half of all Affordable Care Act Medicaid expansion enrollees in 2024 were likely ineligible for the program, costing federal taxpayers an estimated $32.9 billion in a single year.
Here’s the breakdown:
- Approximately 9.2 million Medicaid expansion enrollees — 46 percent of all expansion enrollment — were likely ineligible in 2024.
- Improper expansion enrollment imposed an estimated $32.9 billion in federal costs in 2024.
- Roughly one-third of improper enrollees appear to have qualified for traditional Medicaid but were instead enrolled in the expansion category, allowing states to receive substantially higher federal reimbursement.
- California accounted for an estimated 3.1 million improper expansion enrollees and more than $10 billion in improper federal spending in 2024.
- Improper enrollment increased substantially between 2019 and 2024, rising from an estimated 4.9 million to 9.2 million people.
- Medicaid's program integrity challenges are not limited to a single state or region: From 2019 to 2024, improper enrollment increased in 31 of the 32 states for which comparable data is available.
One of the report's main arguments is that Obamacare created financial incentives that encouraged states to maximize Medicaid expansion enrollment.
Because Washington pays at least 90 percent of expansion costs — far more than it reimburses for traditional Medicaid populations — the report argues states have relatively little financial incentive to ensure expansion eligibility is being accurately determined.
As noted, researchers estimate that roughly one-third of the improper expansion enrollees actually qualified under traditional Medicaid but were instead placed into the expansion category, allowing states to receive significantly higher federal reimbursement.
And California accounted for the largest share of the problem, according to the analysis, with an estimated 3.1 million improper expansion enrollees and more than $10 billion in questionable federal spending during 2024.
But the report also found the issue extends well beyond California. Improper enrollment increased in 31 of the 32 states with comparable data between 2019 and 2024, nearly doubling nationwide from roughly 4.9 million people to 9.2 million.
READ MORE: It Happens Here Too: Three Alaska Group Homes Now Facing Medicare Fraud Charges
This is just the tip of the iceberg. The Government Accountability Office earlier estimated that total financial losses from fraud between 2018 and 2022 were as high as between $233 billion and $521 billion each year. Newsweek noted in April:
Federal auditors told lawmakers on April 15 that fraud is costing the U.S. government roughly half a trillion dollars annually across federal programs, including those run by states.
Trillions of federal dollars continue to move through state systems, with many long-standing fraud controls still unaddressed after the COVID-19 spending surge.
State-administered programs like Medicaid, unemployment insurance, and nutrition assistance face heightened scrutiny as Congress weighs how to reduce losses without slowing aid.
It may be a low-ball estimate. Elon Musk, who once ran the now-hobbled Department of Government Efficiency, believed it may be as high as $1.5 trillion a year.
My lower bound guess for how much fraud there is nationally is ~20% of the Federal budget, which would mean $1.5 trillion per year. Probably much higher. https://t.co/T6URzaqHqY
— Elon Musk (@elonmusk) December 29, 2025
What is the Trump administration doing about it?
Just this week, CMS Administrator Dr. Mehmet Oz joined federal prosecutors in Philadelphia to announce a major healthcare fraud takedown and the expansion of the Justice Department's Health Care Fraud Strike Force into eastern Pennsylvania.
The latest cases follow the Justice Department's nationwide 2025 Health Care Fraud Takedown, which charged 324 defendants in schemes involving more than $14.6 billion in intended losses. CMS separately announced it had prevented more than $4 billion in fraudulent claims before payment while suspending or revoking the billing privileges of more than 200 providers.
Alaska prosecutors recently indicted six defendants accused of fraudulently billing nearly $14.7 million to the state's Medicaid program through a network of assisted living facilities. Investigators allege the defendants billed for services that were never provided, falsified records, forged signatures, and impersonated a former administrator.
Meanwhile, federal prosecutors in Pennsylvania unveiled charges against 12 individuals and one agency accused of schemes involving roughly $5.76 million in fraudulent Medicaid billings. Prosecutors alleged some defendants billed Medicaid for home-care services supposedly provided by caregivers who were dead, incarcerated, or otherwise unable to perform the work.
In the Northern District of Texas, four defendants were charged in healthcare fraud schemes involving more than $210 million as part of the Justice Department’s 2025 National Health Care Fraud Takedown.
The broader operation produced charges against 324 defendants across 50 federal districts and 12 state attorneys general’s offices, including 96 doctors, nurse practitioners, pharmacists and other licensed medical professionals. Prosecutors allege more than $14.6 billion in intentional losses.
Federal authorities also seized more than $245 million in cash, cryptocurrency, luxury vehicles and other assets. CMS said it prevented more than $4 billion in false or fraudulent claims from being paid and suspended or revoked the billing privileges of 205 providers.
The Trump administration is making progress under the direction of the Anti-Fraud Task Force. But the colossal extent of the government fraud indicates that America has a long way to go.
