President 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. Or, perhaps, both.
The Trump White House insists Musk will cut only waste and fraud and not hurt program participants. But that’s equally unlikely.
Where The Money Is
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 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 2022, banks reported about $182 million in identity theft from their accounts, according to the Government Accountability Office, Congress’s independent auditor, though it is very likely Social Security claims by identity thieves were only a small fraction of that.