The government paying over a billion dollars to dead people is not just fraud; it's a symptom of profound operational failure. The inability of the Social Security Administration and the Treasury to share a simple "death master file" points to a systemic breakdown in data management and accountability.

Medicaid claims for autism in Minnesota skyrocketed from $3M to $400M in five years. This suggests that large-scale entitlement fraud doesn't just steal money; it can also create the illusion of a worsening social crisis by manufacturing data, leading to misallocated resources and a distorted public perception of the problem's scale.

While outright fraud in government spending is low (under 1%), Buttigieg argues the real financial drain is waste from inefficiency. He points to project cost escalations and procedural roadblocks as far more significant sources of wasted taxpayer money than criminal fraud.

The Centers for Medicare & Medicaid (CMS) avoids cracking down on high-cost oncology drugs because they represent a critical profit center for otherwise low-margin hospitals. Hospitals lobby behind the scenes, arguing that reducing these reimbursements would create systemic issues in the healthcare system, creating a regulatory moat.

Contrary to belief, Medicare isn't automatic. The government imposes lifetime penalties on those who delay signing up to prevent people from waiting until they are older and sicker. This forces younger, healthier 65-year-olds to pay into the system, ensuring the risk pool remains balanced and financially viable.

The immense regulatory complexity in U.S. healthcare creates an estimated $500 billion "tax" of administrative bloat. The non-obvious opportunity is that by using AI to eliminate this waste, the savings could be redirected to fund expanded patient care, rather than just being captured as profit.

Large-scale healthcare fraud schemes, such as the explosion in hospice centers in Los Angeles, are not just domestic crimes. They are often sophisticated operations run by foreign nationals and organized crime with ties to foreign governments.

A significant source of waste stems from "zombie payments"—recurring government funds that continue indefinitely without review. When the official who authorized the payment leaves, retires, or dies, there is often no system to shut it off, creating a perpetual drain of funds to companies or individuals who rarely report it.

Many assume the Department of Defense has the largest budget in the U.S. government. However, the Department of Health and Human Services (HHS), which includes Medicare and Medicaid, has a budget that is two times larger. This fact reframes the scale and financial importance of healthcare within national priorities.