DOGE is starting to target Medicare, the Journal reports.

Like most DC wonks, your correspondent has been broadly (but not wholly) skeptical of DOGE's ambitions. It's certainly a good idea to let a genius like Elon Musk try to make things more efficient, and he will almost certainly improve things at the margins, but can he accomplish the incredible budget savings he has touted? Probably not, is the consensus. Most of the money DC spends, as we know, is spent on entitlement programs that are not only popular but already pretty efficient. Social Security doesn't spend most of its money on bureaucrats who just sit around on Zoom meetings, and if there are such do-nothing bureaucrats in Social Security. Much of what DOGE might like to do is constrained by Acts of Congress anyway. And so on.

But there is one place where there is a true potential to get the kind of DOGE-like transformation. And that is Medicare.

There is good reason to think that Medicare fraud is much, much more significant than is commonly acknowledged (and what is commonly acknowledged is already alarming).

Many experts and former prosecutors believe that official estimates of fraudulent billing only scratch the surface because they rely heavily on audits and voluntary reporting. Fraud that slips through audits remains uncounted.

GAO has long designated Medicare as a “high-risk” program due to its vulnerability to waste, fraud, and abuse. The program's fee-for-service structure and complex organization, with four parts with different reimbursement rules and procedures is like an invitation to fraud. DOJ regularly announces settlements and judgments in the hundreds of millions of dollars against healthcare providers, pharmaceutical companies, and device manufacturers for Medicare fraud and abuse. The frequency and size of these settlements suggest that there may be widespread illicit behavior that is only partially caught. Many whistleblower cases indicate that fraudulent billing practices can become ingrained in corporate or clinical culture, which suggests systemic issues rather than isolated incidents.

At the same time, the fundamental problem of detecting Medicare fraud, which is the giant scale of the program and the astronomical number of claims it processes, versus numerous small actors, is perfect for the kind of skills that Elon and his DOGE team of AI-programming whiz kids provide. The idea that massive amounts of fraud—if they exist—may be uncovered using state-of-the-art AI software that Elon's team can put together and that the Federal government doesn't currently have access to is very credible.

If DOGE does uncover this massive amount of fraud, get ready for a political fight. If the fraud is as large as is to be suspected, many interests, including "borderline" or non-compliant healthcare providers, and industries that profit from over-utilization, will revolt. In some service lines, like home health, hospice, or diagnostic testing providers, incentive structures allow for very high and questionable billing. These people will be tempted to argue that one man's "fraud" is another man's honest mistake and that stopping the fraud is tantamount to letting grandma die. An argument that the Democrats may well reprise, accusing the Trump Administration of wanting to destroy Medicare.

Hopefully the Trump Administration stands fast. If nothing else, they need the money.

Policy News You Need To Know

#Debanking — The FDIC's new Republican leadership has released details on the unbanking of entrepreneurs and political dissidents under the previous regime (it's strange how natural it has become to talk of the Biden Administration as "the previous regime"). It's damning.

#DOGEPartTwo — This may be the most important piece of policy news in the past 24 hours, certainly among the unreported ones: OPM has sent a memo saying that each agency CIO role would be changed from a civil service role to an appointee role. This is hugely significant because it allows the Administration to staff these roles with high-caliber Silicon Valley people, who can then implement digital transformation across the government. This is truly very exciting.

#DOGE — Another item for DOGE to look at, since they're apparently starting to look at the IRS: as ATR reminds us, in the IRS work-from-home era, identity theft cases took an average of 676 days to resolve. It's so nice to see Republicans become the party of competent government.

#Usury — Sen. Hawley is introducing a bill co-sponsored with Sen. Sanders to cap credit card interest rates at 10%. During the campaign, President Trump had proposed capping credit card interest rates. It's a popular idea in theory, but in practice it will just mean cutting a lot of people's access to credit. Of course, it may be in their long-term interest for them not to have credit. At the same time, a lot of poor people do rely on short-term (necessarily high-interest) loans to pay utility bills and the like. It's not all deliquent poor guys buying a Mustang on credit. It's a complicated issue on both sides.

#TheScience — A big new meta-analysis has come out, and in the past fifty years there has been zero (0) progress in successfully treating depression. There may be no non-spiritual cure for lack of meaning… How many of these ineffective remedies (looking at you, SSRIs) are being paid for by taxpayers? Should HHS crack down on ineffective pharma cures? (Looking at you, RFK Jr)

#Vices — Speaking of: a new study shows that frequent cannabis users have lower brain activation during working memory tasks. Who could have thought? Maybe legalizing this stuff is a bad idea.

#VotingRights — The SAVE Act is back this Congress, and rightly so. Even if you think the problem of noncitizens voting is overstated, confidence in elections is an important good in itself, as Jonathan Madison of R Street explains.