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The government lost billions of dollars to fraud and wrongful payments last year.
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Both Musk and Ramaswamy have indicated that they will eradicate fraud through DOGE.
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Some experts told BI that they are optimistic about action on fraud, but DOGE leaders should be willing to invest in the media.
Elon Musk and Vivek Ramaswamy have the opportunity to take on fraud in government programs when President-elect Donald Trump takes office.
Musk and Ramaswamy are tasked with leading the new Department of Government Efficiency, or DOGE, which seeks to reduce government waste and cut costs. Musk has set a goal of cutting $200 million in annual revenue.
One of Musk and Ramaswamy’s goals for DOGE could lead to an early win with bipartisan support: rooting out fraud in federal programs like Medicare. In a recent interview, Ramaswamy told CNBC that “the little secret is that most of these dollars are not going to the people they were supposed to be going to in the first place.”
“There are hundreds of billions of dollars in savings to be made” through those fraud prevention measures, he said.
Musk shared that sentiment, posting on X in November: “The scale and audacity of government fraud is astounding!”
Data from the Government Accountability Office showed that federal agencies made $2.7 billion in improper payments since 2003, and by the year 2023, the GAO estimated that agencies made $236 million in improper payments. Surprisingly, those improper payments include categories other than intentional fraud, such as administrative errors, Orice Williams Brown, GAO acting chief, said in September testimony to Congress.
“Although all fraudulent payments are considered improper, not all payments are due to fraud,” said Brown.
The top agencies affected were Medicare and Medicaid, which the GAO said had $51 billion and $50 billion in improper payments, respectively, followed by epidemic programs, including the Paycheck Protection Program.
Experts told Business Insider that there is a chance for DOGE to make progress in this regard if they look at effective solutions such as modern systems and improve data analysis, a place where Ramaswamy and Musk can improve their knowledge of Silicon Valley.
Both fraud and improper payments have become difficult for governments to address because of “outdated technology and limited program oversight,” Linda Miller, founder of the Program Integrity Alliance — a government fraud prevention group — told BI. .
“You have to use advanced technology and data to really move the needle,” Miller said. “And the government is not using advanced technology and data to solve this problem.”
Jetson Leder-Luis, an assistant professor at Boston University and a government fraud researcher, told BI that DOGE could pursue “a lot of low-hanging fruit ideas” to fight fraud in large industries like healthcare.
“I think that DOGE has the potential to make big strides in fraud,” said Leder-Luis, adding that if they increase funding for enforcement and create streamlined data pipelines, “they have a huge potential to save tens of billions of dollars.”
Trump’s transition team did not immediately respond to a request for comment from the BI.
Government programs create a way for fraud
The government has been unable to deal with large-scale fraud in recent decades due to a lack of resources and personnel to investigate fraud, and a failure to process data and technical systems, according to Miller and Leder-Luis.
The GAO found that the government’s annual revenue loss from fraud was between $233,000 and $521,000, based on data from fiscal years 2018 to 2022.
Miller pointed to the epidemic as a “perfect storm” of fraud, with the Paycheck Protection Program and disaster loan programs as prime examples. Miller said all the help available, as well as limited attention at the state level during a national emergency, made it easy for fraud to go undetected; some of the programs allowed people to personally approve their loan applications, creating a fraudulent process.
“The lack of development of our digital technology at the government level was an obstacle to preventing fraud during the pandemic,” Leder-Luis said.
There have been several instances where people try, and sometimes succeed, to game the system and get welfare benefits that they are not entitled to. But, Miller said, the biggest concern is more than the human condition; “massive fraud schemes” took millions of dollars from the government. For example, the FBI opened an investigation into a program that Medicare officials said defrauded the program out of $3 billion after other companies billed the program for catheters patients never requested or used.
Lawmakers and the Department of Justice have worked to take steps over the years to address the crime, including the joint Pandemic Response Accountability Committee that oversaw pandemic programs. However, Miller said that although organizations are focused on getting benefits to the beneficiary, there is still not enough focus on ensuring that the benefits are going to the right person.
“That’s the thing that I think makes the American people angry,” Miller said. “You wonder, ‘Where are your tax dollars going if they’re not stopping this kind of fraud?’
The DOGE can play a role
Miller said he expects DOGE to seek “quick wins” after Trump takes office. This may include improving IT systems and investing more in fraud detection. The key thing that DOGE will have to contend with is that breaking the cost of fraud requires some upfront investment.
“It can be very helpful to have the lens of the private sector come in to look at this,” Miller said, which is why Musk and Ramaswamy’s background could be useful in bringing new technology to the public sector. However, he said, the two DOGE leaders should be willing to invest in new fraud detection systems because, even among their goals of reducing costs, modern technology is not going to be free.
GAO’s Brown also outlined recommendations for federal agencies to better prevent fraud, including using external data from third parties to identify information Americans provide on credit and insurance forms.
With Republicans soon in Congress and the White House, DOGE’s recommendation to Trump and lawmakers will likely see the easy way out. Fixing crime also saw Democratic support; Rep. Jamie Raskin introduced the Government Spending Oversight Committee Act in April, which would give government inspectors tools to fight fraud on major spending bills.
To be sure, some lawmakers and experts are skeptical of DOGE’s approach. The US spent $6.75 trillion in 2024, data from the Treasury Department showed, and it would not be as easy as DOGE leaders said to spend the money, lawyers told BI.
While the administration wants to extend regulations at federal agencies, Musk and Ramaswamy have previously said they would propose a list of regulations that Trump could “pause.” Some lawyers have argued that the plan is too complicated, and DOGE leaders may face legal challenges if they follow that path.
Musk and Ramaswamy are also not the first to suggest cuts in government spending. Former President Ronald Reagan’s Grace Commission, aimed at rooting out waste and inefficiency in the federal government, cut $22 billion in welfare programs that ended up being cut by his tax cuts and defense spending.
However, Leder-Luis said, what DOGE considers “dirty” is an interpretation, while fraud is illegal, and there is support all the way to do it.
“If we lose $50 billion a year to fraud in the health care system alone, that will be paid for by us,” Leder-Luis said. “There are many things that people want the government to be able to pay for that we all think are good and important, like good roads and schools. And if we say, ‘I’m sorry, we can’t afford it. ‘ then, we are giving health care fraud instead.”
Read the first article on Business Insider