Fraud: Start at the Beginning

By Cagkan @Adobe Stock

Hiding in Plain Sight

Under the directive of the Trump administration, Elon Musk heads DOGE with the goal of cutting about $1 trillion of “fraud and waste.” Democrats and other skeptics say it’s just not possible because half of federal spending constitutes entitlements, like Social Security, Medicare, Medicaid, and some smaller health insurance programs, and President Donald Trump has promised not to cut those entitlements.

Add close to $1 trillion for defense and another $1 trillion or so for interest on the national debt, and that leaves little room for much cutting, Francis Menton, aka the Manhattan Contrarian, reports.

Or does it? That’s right; there is massive fraud in entitlement programs. Mr. Menton doesn’t pretend to know if the amounts of such fraud could be significant in the context of the huge numbers at issue, but he is willing to give it a try with big numbers of fraud “hiding in plain sight.”

A good place to start looking for fraud is the entitlements. Like Pooh, Menton also advises, when you don’t know where to start, the beginning is a good place to start – like“big picture numbers” (the center of the Budget and Policy website).

Looking for fraud in entitlements, Mr. Menton sticks close to home. In his state of New York, Menton refers to the Consumer Directed Personal Assistance Program. Bloomberg had a piece about it in July 2024 (behind paywall), rewritten by Newsweek.

The idea, supposedly, was to use Medicaid funds to pay relatives like spouses and children to take care of their infirm relatives, thus save the costs of professional aides and nursing homes.

From Newsweek:

“Oftentimes, ideas that start with the best of intentions can be taken advantage of in the wrong hands,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek. “With home health, some states like New York thought it would be a good idea to allow family members and friends to get paid for providing home health assistance to loved ones using Medicaid and Medicare dollars.

Well, it sounds good, Mr. Menton, so what’s the problem?

[Beene]: “The problem is now you have individuals taking advantage of a pretty liberal, open-ended process for determining who qualifies.” 

From Newsweek:

[T]he money going to this program triple[d] across the span of the last five years, and home health jobs are [in 2024] considered to make up 12 percent of New York City’s private sector jobs, Bloomberg reported.

Bloomberg interviewed New York Governor Kathy Hochul in July of that year. In the interview, Hochul appeared to recognize that the home health care aide situation had gotten out of hand and needed to be reined in.

From the 2024 Newsweek piece:

In the interview, Hochul admitted that the problem was “individuals taking advantage of a pretty liberal, open-ended process for determining who qualifies.” 

Hochul told Bloomberg that the program was being abused so much that it now makes up the majority of New York City’s job increases. . . . “I’m telling you right now, when you look on TikTok and you see ads of young people saying, ‘Guess what, you can make $37 an hour by sitting home with your Grandma. You know, here’s how you sign up,’ it has become a racket,” 

Good that Hochul recognized the problem. What action did she take? 

Nada. As Mr. Menton reports: 

Instead, it appears that she has switched sides, and in ongoing budget negotiations this year is supporting a vast increase in Medicaid spending to continue funding this racket, among many other things.

From The New York Post (April 6):

In a tale all too typical of Albany, Gov. Kathy Hochul a year or so ago was pushing to rein in out-of-control state Medicaid spending on home health aides, only to since switch sides with an eye on her re-election run next year. 

Now Medicaid outlays are set to soar at least 17% in the next budget, while the aide ranks are soaring and indeed are by far the single largest job category in all New York.

In data derived from BLS (on the MC’s website), Mr. Menton shows that in NY there are almost three times the Home Health and Personal Care aides as all jobs in retail sales.

How the Left Seizes More Power

Reports Francis Menton: The Post attributes Governor Hochul’s switching of sides to her buying the support of a health care union known as “Local 1199” (of the SEIU) in the run-up to her re-election campaign next year.

Local 1199 hopes to unionize the home health aides to get hundreds of thousands of new dues-paying members, and then to engage in collusive wage negotiations where the bill will be paid substantially by the federal taxpayers.

As the Manhattan Contrarian notes, “If one this big and this obvious is just allowed to metastasize for years without any attempt at oversight, there are likely to be plenty of others.”