There is a specific kind of government dysfunction that nobody in power has much incentive to fix: the kind where the fraud is diffuse enough to be invisible in any single district, where the perpetrators are often licensed professionals rather than street criminals, and where the enforcement apparatus exists mostly to signal seriousness rather than deliver it. Medicaid Fraud Control Units — MFCUs, in the alphabet soup — are that dysfunction made institutional.

Every state is required to operate one. The units are funded through a federal matching arrangement: Washington covers roughly 75 percent of operating costs in the first three years of a unit's existence, then drops to a 50-50 split thereafter. The arrangement sounds robust. The reality is that Medicaid spending has ballooned — up 68 percent between fiscal years 2019 and 2025 — while the enforcement infrastructure has grown at nothing close to the same rate. Federal grants to the anti-fraud offices have not scaled proportionally to the program's expansion, leaving units stretched thin against a problem that has widened considerably.

The math matters because Medicaid is not a small program. It now covers more than 80 million Americans, making it the single largest source of health coverage in the country. The Government Accountability Office has repeatedly flagged improper payments — a category that includes outright fraud, billing errors, and payments for ineligible recipients — as a persistent and material problem. In fiscal year 2023, the Centers for Medicare and Medicaid Services estimated improper payments at roughly $50 billion for Medicaid alone. That number is almost certainly understated; improper payment estimates are based on sample audits and do not capture fraud that goes undetected.

MFCUs, in theory, are the sharp end of the spear. In practice, many of them function more like reactive case-clearers than proactive investigative agencies. They depend heavily on referrals from state Medicaid agencies, which have their own institutional incentives to manage embarrassment rather than generate headlines. A state Medicaid agency that flags a systemic billing scheme is, in effect, announcing that it failed to catch the scheme earlier. The incentive structure does not naturally produce aggressive self-reporting.

The cases that do get prosecuted tend to cluster around the obvious and the easy: home health aides billing for visits they never made, individual practitioners submitting inflated claims, small-scale personal care agencies running ghost-patient operations. These are real crimes and real prosecutions matter. But they are also the low-hanging fruit. The larger and more structurally embedded forms of Medicaid abuse — corporate chains overbilling across hundreds of facilities, private equity-backed providers gaming reimbursement codes, managed care organizations quietly denying claims to pocket capitation payments — rarely show up in MFCU press releases, because they require the kind of sustained, resource-intensive investigation that underfunded offices cannot sustain.

The current political moment has produced a peculiar convergence. The Trump administration, with Mehmet Oz now at the helm of CMS, has made Medicaid fraud a rhetorical centerpiece — useful both as justification for the sweeping eligibility cuts moving through Congress and as a way of shifting public focus from those cuts to the bad actors within the program. Fraud is real. It is also being instrumentalized. The danger is that a loud political focus on fraud serves as cover for changes that would reduce Medicaid coverage for millions of legitimately eligible people while doing relatively little to improve the prosecutorial machinery that actually catches and punishes fraud.

Some states have moved independently. Iowa, for instance, convened a dedicated Medicaid Fraud Elimination Task Force this year, with a mandate to develop concrete enforcement recommendations — a signal that at least some state governments recognize the existing structure is inadequate. A search warrant executed at a care facility in St. Cloud, Minnesota earlier this year, with state investigators seizing records, illustrates the kind of on-the-ground work that does happen. Individual cases are being made. The question is scale.

What is not happening, anywhere with any consistency, is the kind of systemic reform that would actually change the incentive architecture: mandatory data-sharing between state Medicaid agencies and their MFCUs, real-time claims analytics flagging anomalous billing patterns before payments go out the door, and federal funding levels calibrated to program size rather than frozen at legacy baselines. The Office of Inspector General at HHS has recommended several of these steps over multiple administrations. They have not been implemented at scale.

Medicaid fraud is not a mystery. It is a known, documented, persistent problem with known, documented, persistent solutions that governments have declined to fully fund or fully implement. What is happening instead is a cycle familiar to anyone who has watched federal oversight work: a surge in rhetoric, a handful of prosecutable cases displayed prominently, and an underlying system that continues to bleed money because fixing it properly would require sustained political will that outlasts the news cycle. The fraud units exist. The question worth asking — loudly — is whether they are resourced to do the job, or resourced just enough to say that the job is being done.