How Trump Is Trying to Make 'Fraud' the New DOGE

Inside the president's gambit to make Americans hate Medicaid — and look the other way on his administration's corruption.

Pamela Herd is the Carol Kakalec Kohn Professor of Social Policy and faculty associate at the Institute for Social Research. Subscribe to her Substack. Don Moynihan is the J. Ira and Nicki Harris Family Professor of Public Policy at the University of Michigan Ford School of Public Policy. Subscribe to his Substack, Can We Still Govern?

Illustration by Riley Levine

At an Oval Office press conference last week that could be euphemistically framed as, uh, freewheeling,¹ President Trump focused on a second term obsession: fraud. It’s the root justification for many unpopular actions by his administration – be it gutting the federal workforce, attacking Social Security, making it harder, especially for women, to vote, and even for his toxic immigration raids in Minnesota.

Leaning into his favorite trope, Trump noted that immigrants “have been cheating for years” when Stephen Miller claimed that “if all of this theft were stopped, it would be enough to balance the budget. The extraction of wealth from American taxpayers to people who don’t belong here is the primary cause of the national debt.”

This is not just untrue, it is a lie on the scale of Elon Musk claiming he would eliminate the deficit. Absolutely fantastical, a kind of fraudulent fraud claim, one untethered from the surly bonds of reason and evidence. The reality, according to an analysis from the libertarian Cato Institute, is the opposite: immigrants have significantly reduced the deficit, contributing a fiscal surplus of $14.5 trillion between 1993-2023.

Trump especially pushed the false claim that Somalis had stolen $19 billion in Minnesota. $19 billion? A Department of Justice prosecutor suggested that half of the state’s Medicaid spending of $18 billion might be fraudulent, but offered no underlying data for the estimate. Indeed, the federal government’s own data points to Minnesota being effective at controlling waste in its Medicaid program. But Trump has repeated his fabricated $19 billion claim repeatedly, regardless.

Trump used such claims to justify the withholding of $259 million in Minnesota’s Medicaid funding, which is how the Administration had kicked off Trump’s “War on Fraud.” While a lawsuit is underway, this type of strategic and illegal withholding of funds — almost unheard of prior to the current Trump Administration — has become all too common.

The task force created by a new executive order only mentioned blue states — in addition to Minnesota, California, Illinois, New York, Maine, and Colorado — reinforcing the suspicion that the war in fraud is effectively a war on blue state safety nets. Fraud feels like the new DOGE: an attempt to target disfavored programs and states wrapped in the gauzy language of good government. Indeed, its no coincidence that Elon Musk also used “fraud” as a justification for his attack on government, even as he found precious little.

Trump’s emphasis on fraud in the safety net maligns popular programs — Medicaid has a 90 percent approval rating — but will do little to help Americans who are drowning in medical debt. Americans across the political spectrum worry more about health care costs than any other cost-of-living concern. Three-quarters of the public say these costs will impact their vote in the midterms. In the meantime, the Administration keeps rolling out one bad idea after another — including most recently an ACA plan with a $31,000 annual deductible — that does little to address peoples underlying concerns.

Trump is betting, instead, on his ability to use fraud as a trope to gut Medicaid, by claiming cuts are simply removing fraud and waste. The underlying hypocrisy is staggering. Trump is yelling about fraud, even as his administration goes on an unchecked crime-spree. Withholding $250 million in Minnesota’s Medicaid funding will not only do nothing to prevent fraud — it will turn eligible beneficiaries into the victims of Trump’s fraudulent fraud squad.

How Do We Know This Is Just a Political Ploy?

Is the Trump administration serious about fraud? This is, after all, arguably among the most corrupt presidential administrations in history. Conflicts of interest are the norm. Overspending on national security appears to be out of control. The Department of Defense is “struggling to spend” its additional $500 billion from US taxpayers that the Administration demanded. But they will give it the old college try, spending almost $100,000 on a piano, $26,000 for a violin, and $21,750 for a flute.

Kristi Noem spent $200 million on “top tier” luxury jets — that included bars and bedrooms, and handed another $220 million in no-bid contracts to firms that had connections to her. Her alleged paramour, Corey Lewandowski, is accused of of shaking down multiple DHS contractors for kickbacks, with such behavior apparently an open secret in the White House.

Kash Patel has turned the FBI into his own personal Make-A-Wish Foundation, hiring UFC fighters, using FBI planes to party with US hockey players in Italy, with buddies for golf and hunting trips, or to meet up with his girlfriend who now has her own FBI security detail.

President Trump has also pardoned more than 70 people convicted of fraud. Philip Esformes stole $1.3 billion from Medicare and Medicaid via fraudulent billing. Trump commuted his 20 year sentence after 14 months served. Lawren Duran was part of a $205 million Medicare fraud scheme but longer needs to repay $87 million in restitution because of Trump’s pardon. This is just the tip of the iceberg: Trump’s pardons eliminated $700 million in restitution and fines.

Its never been a better time to pursue some types of fraud. Some of Trump’s pardons have gone to crypto operators accused of ripping off investors, but whose investment into Trump’s crypto coincided with their legal and regulatory problems disappearing. Also, the federal agency designed to protect the public from fraud by private companies is effectively dead. The CFPB is now a zombie regulator, having dropped dozens of lawsuits that would valued at more than three billions dollars.

If the Trump administration was really interested in pursuing fraud in Minnesota, it would support prosecutors trying to track down those who broke the law. Instead, it has undermined such prosecutions. Trump’s ramp-up on immigration in Minnesota meant that federal lawyers had little chance to keep their focus on fraud. A slew of Department of Justice prosecutors based in Minnesota, including Joseph Thompson, the lead prosecutor working on fraud cases, quit after they were pushed to investigate Renee Good and her wife after Good was killed by an immigration agent.

The Minneapolis Police Chief said: “When you lose the leader responsible for making the fraud cases, it tells you this isn’t really about prosecuting fraud.” The New York Times reported that Thompson “grew frustrated in recent weeks as the immigration surge became a distraction for the office’s work on fraud, undermining the goal the administration said it was trying to pursue.”

Putting Minnesota in Perspective

There are other indicators that Trump is more interested in treating fraud as a means to score political points rather than something to be minimized. The letter from the administration to Minnesota, which provided the basis for blocking funding, cites no evidence of current (or recent) fraud from federal audits of Minnesota’s Medicaid program. It simply asserts that there is “rampant” fraud.

The reality is that Minnesota has faced challenges with fraud, particularly in its federally funded child care and pandemic era nutrition programs. But it has been broadly effective at managing its Medicaid health services. What limited fraud it did have, which nearly every state has to manage, was being addressed.

Since 2024, the state has made significant organizational changes, including hiring an Inspector General that has a decade of experience prosecuting Medicaid fraud, as well as ramping up its investigative and oversight capacity. It also had complied with federal demands by submitting a Corrective Action Plan. (Meanwhile, at the federal level, about two-thirds of federal government Inspector Generals whose job it is to detect fraud have been pushed out by Trump).

The more telling point is simply that the Minnesota audit data that the federal government tracks shows the state’s effectiveness at minimizing Medicaid payment errors — a broader measure of whether the state is ‘wasting’ tax payer money. Minnesota’s error rate is just 2 percent. For comparison, the rate in Tennessee is 5.6% and 9.7% in Alaska.

Is There Waste in Medicaid?

Let’s step back. Trump wants you to believe that fraud is endemic in Medicaid, a massive problem. Is this true?

The 2025 federal audit of Medicaid found that about 94% of its payments are paid accurately — and most of the remaining error reflects improper documentation rather than actual payment error. By contrast, a similar estimate for private health insurers is 80%. In other words, the payment error rate for Medicaid is a fraction of that of private health insurers.

The reality is that it is difficult to avoid any errors. Payment rate determinations are complex and vary based on a wide range of factors. Moreover, most health care providers spend significant amounts of administrative resources managing the paperwork and administrative costs designed to keep these errors lower.

What’s the Actual Goal?

Fraud has a precise legal definition, one which the Trump administration largely ignores. This definition reflects intention to deceive rather than an accident or incompetence. And this sort of behavior is relatively rare.

The simple reason Trump focuses on fraud is because it resonates with the public — it’s an effective political tool.

Over half of the public thinks that fraud is a significant problem in Medicaid. Maybe this just reflects the firehouse of claims about fraud made by conservatives, who are inclined to think that fraud is undertaken by government employees. But aggregate public opinion data reflects a somewhat more nuanced view. Few people think that beneficiaries are responsible for fraud — instead half blame private insurers that participate in these programs, as well as health care providers.

And these beliefs roughly align with the facts. To the extent that there is Medicaid fraud — it’s perpetrated by larger companies and providers, not the public or government employees. For example, Kaiser Permanente reached a $556 million settlement with the Department of Justice over Medicare Advantage fraud. Chances are that you have not heard of this story, because it doesn’t fit with Trump’s preferred narrative of fraud. But even in Minnesota, the pattern of organized providers stealing resources, rather than individual beneficiaries, appears to hold true.

The vulnerability to private organizations engaged in fraud is a natural function of a health and aging system where the government pays private and nonprofit organizations to provide services. We have chosen not to have government directly provide these services, and constantly look for cheaper alternatives, like home based services. This is also why the Republican beliefs in the survey cited above that government officials are responsible for fraud doesn’t make sense. In an article in Health Affairs, experts warn that targeting, for example, home-based service providers:

[J]eopardizes services that have become foundational to our country’s modern long-term care system. It would undo more than 40 years of bipartisan federal policy designed to rebalance that system away from institutional care toward less restrictive care provided in the homes and communities where disabled people and older adults want—and have a civil right—to live.

The Trump administration seems to think if it succeeds in pushing its fraud narrative it can justify what are, in reality, just cuts to the existing program that individual beneficiaries rely on.

This comes in the form of direct cuts, such as the $259 million denied to Minnesota, but also in more subtle ways. The Trump administration has been using fraud claims to drown the public in paperwork, making it harder for them to access services. The One Big Beautiful Bill Act introduces a wave of new administrative burdens in Medicaid and SNAP, which will dramatically reduce the use of these programs.

States can try to innovate to manage around these federal government constraints by, for example, expanding automatic renewal when they have reliable data showing that Medicaid beneficiaries are eligible. In fact, they are required to do so by law. But Trump-aligned Medicaid opponents, such as the Foundation for Government Accountability, label such efforts to reduce burdens as “fraud by design”.

Basically, any system that is not burdensome must be fraudulent! If this sounds outlandish the Trump executive order on fraud is basically a laundry list of new administrative burdens with zero acknowledgement that this will predictably reduce access to these programs.

Throwing the Baby Out with the Bathwater

With Minnesota, Trump is targeting a state that has both been in compliance with federal fraud reduction efforts and is not an outlier on its performance in Medicaid.

By de-emphasizing legal prosecutions to favor the collective punishment of all Minnesotans, Trump is punishing the eligible claimants who need care, while reducing the legal risks for the actual perpetrators of fraud.

This won’t get better anytime soon. The Trump administration seems to have persuaded itself that fraud is the key to re-establishing its flagging midterm hopes. For example, fraud is the nominal justification for the SAVE Act, a bill that would likely disenfranchise millions of Americans, and which Trump has argued is essential to Republicans winning elections. If the economy keeps slowing, gas prices keeps rising, and the war with Iran becomes a quagmire, expect to hear a lot more about fraud.

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1 Other things Trump said in the presser: the war would be over in a week, the war would not be over in a week. That he had talked to a former unnamed President who endorsed the war (all living former Presidents denied this). That “I do believe I’ll be having the honor of taking Cuba.” He also used “nurseries” and “nursing homes” interchangeably when discussing fraud in Minnesota.