There is a Ferrari sitting somewhere that cost $600,000. The man who bought it did not build a thing, heal a patient, or lay a mile of pipe. He billed Medicare for equipment the patients never received, collected the check, and went shopping. That is the whole story. The rest is detail.
The detail matters, though. Medicare paid out roughly $900 billion in fiscal year 2023. The Government Accountability Office estimates that somewhere between nine and ten cents of every dollar in federal health programs leaves through a hole that has a name: fraud, waste, and abuse. Call it a conservative $100 billion a year. That is not a rounding error. That is the entire gross domestic product of a mid-sized nation, extracted annually from a program that was built so elderly people could see a doctor without selling the house.
Here is how the extraction works in its plainest form. A man opens a durable medical equipment company in, say, Miami or Houston or Los Angeles. He hires people to cold-call Medicare beneficiaries. He bills for power wheelchairs, back braces, continuous glucose monitors — items the patients did not request and sometimes never touched. The company submits the claim electronically. The check arrives in days. Before investigators catch the pattern, the company has dissolved, the owner has moved the money, and a new company has opened three miles away under a cousin's name.
The Justice Department announced in June 2023 that a single coordinated takedown — they called it Operation Last Stop — netted 78 defendants across the country and accounted for $2.5 billion in alleged fraudulent billings. Seventy-eight people. $2.5 billion. The operation had a name because this particular variety of theft is common enough to require a coordinated name.
Private insurance is not spared. Insurers put the number for healthcare fraud against commercial plans somewhere north of $300 billion annually, though the figure is slippery because private companies do not report losses the way federal agencies do. What they do is pass the cost along. The premium for a family of four on an employer-sponsored plan crossed $23,968 in 2023, according to the Kaiser Family Foundation’s annual survey. Some share of that number is paying for someone else’s durable medical equipment that never left a warehouse.
Meanwhile, a person working a full-time job at $15 an hour takes home roughly $2,200 a month before taxes. Median rent for a one-bedroom apartment in an American city ran $1,487 in early 2024. The arithmetic leaves $713 for everything else. Food. Transportation. The co-pay on the prescription that the honest doctor actually wrote.
Medicaid fraud follows the same architecture as Medicare fraud, with the added feature that the victims of the billing are often people who cannot afford to be victims of anything else — low-income families, children, the disabled. The fraudster picks the pocket of the program, and the program, squeezed, finds reasons to tighten eligibility.
The $600,000 Ferrari was seized by federal agents. It is sitting in an impound lot. The payments on it are done.