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Home»Finance News»Musk Can’t Cut $700 Billion In Social Security, Medicare And Medicaid Fraud
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Musk Can’t Cut $700 Billion In Social Security, Medicare And Medicaid Fraud

March 13, 2025No Comments5 Mins Read
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Musk Can’t Cut 0 Billion In Social Security, Medicare And Medicaid Fraud
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WASHINGTON, DC – MARCH 11: President Trump and Senior Advisor Elon Musk sit in a Tesla Model S on … [+] the South Lawn of the White House. (Photo by Andrew Harnik/Getty Images)

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President Donald Trump’s advisor Elon Musk went on TV the other day to say he’d cut up to $700 billion in fraud and waste from Social Security, Medicare, and Medicaid. He can’t.

The inevitable result: He’ll have to either slash benefits for program recipients or fall far short of his goals for cutting government spending. Perhaps both.

The Trump White House insists Musk will cut only waste and fraud and not hurt program participants. But that’s unlikely.

Where’s The Money?

To understand why, take a close look at these three programs:

  • Social Security benefits go to individual older adults or people with disabilities.
  • Medicare payments go almost entirely to medical and long-term care providers such as hospitals, nursing homes, home health agencies, doctors, drug and device makers, and Medicare Advantage managed care plans.
  • Half of Medicaid payments go to the managed care organizations that operate much of the program—usually big insurance companies. Another big chunk goes to nursing homes or home care agencies.

Last year, Social Security paid out about $1.5 trillion in benefits. Medicare paid $912 billion, and Medicaid paid $626 billion, for a total of roughly $3 trillion. Thus, Musk assumes that more than one-quarter of all federal spending for these three programs is waste and fraud.

No independent evidence supports his claim.

How Much Fraud?

Stealing from Social Security is not easy. The agency tracks employment and payroll tax payments for all workers with a Social Security number and automatically calculates old age benefits. It is very hard to game that system.

Social Security does confront challenges from the explosion of identity fraud. In 2023, banks reported about $182 million in identity theft from their accounts, according to the Government Accountability Office, Congress’ independent auditor, though it is very likely Social Security claims by identity thieves were only a small fraction of that.

There may be more potential for fraud in disability claims, But Social Security has multiple layers of review intended to prevent such scams. The real risk: Trump Administration efforts to fire thousands of Social Security employees will reduce their ability to catch fraud.

Musk’s Department of Government Efficiency says it has been combing through Social Security records hunting fraud. But it is impossible to know merely by looking at a claim whether it is fraudulent, or even improper. That requires a detailed investigation.

So far, Musk’s and Trump’s most explosive allegation is that “millions and millions of people over 100 years old” are receiving benefits, an allegation that has been widely debunked.

Overall, in 2024, Social Security’s Office of Inspector General reported about $72 billion in improper payments between 2015 through 2023. But they were not all fraud and reflect only about 1 percent of total benefits paid over that period, not the one-quarter Musk implied.

It is much tougher to calculate improper payments, including fraud, in Medicare and Medicaid. The GAO estimated the two programs made about $100 billion in incorrect payments in 2023, almost all to medical and long-term care providers or insurance companies. Some was fraud, some unintentional overbilling, and some disputed payments.

Total improper payments from all three programs adds up to about $170 billion, assuming the Trump Administration could collect it all, which is implausible at best.

To put Musk’s claims in context, the GAO calculated the entire federal government loses between $233 billion and $521 billion annually from fraud. That’s a lot of money, but far short of far short of the $500 billion to $700 billion Musk claims he can get from just three programs.

The Costs To Beneficiaries

What could Trump do to reduce fraud and waste in Social Security, Medicare, and Medicaid, and how would it impact beneficiaries?

Social Security could make claimants jump through more hoops to receive benefits. It could try to use artificial intelligence instead of people to approve claims, but given the state of AI today, such a step would be fraught with risk.

There are good reasons to fight provider fraud in Medicare and Medicaid. But if not done carefully, stopping overpayments in Medicare and Medicaid could hurt beneficiaries.

For example, the programs could require more documentation from providers or more layers of review of that paperwork, though mass firings at the Centers for Medicare and Medicaid Services will make that more difficult.

Worse, providers and payers may already spend as much as a half a trillion dollars and many hours on medical billing. As the U.S. faces shortages of primary care doctors and other providers, adding more paperwork could drive more to leave clinical medicine, which would further limit access to healthcare by Medicaid and Medicare beneficiaries.

Nursing homes, already struggling with severe shortages of nurses, would have to assign even more of them to fill out forms, leaving fewer to care for patients and residents.

Of course, Trump could save Medicare and Medicaid dollars by simply reducing payments to doctors, hospitals, and insurance companies. But in today’s environment, that too would likely further limit patient access to care, to say nothing of running into a political buzzsaw.

Musk makes it all sound easy. It isn’t.

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