Federalist Radio Hour — ‘Fraught With Fraud’: Exposing States’ Medicaid Money Dump
Date: February 27, 2026
Host: Matt Kittle
Guest: John Hart, CEO of Open the Books

Episode Overview

This episode examines the explosion of fraud and waste in state-administered Medicaid payments, particularly focusing on personal assistant and in-home service providers. Host Matt Kittle and guest John Hart (Open the Books) discuss shocking findings about ballooning Medicaid payments, systemic vulnerabilities to fraud, notable individual and state-level scandals (with examples from Pennsylvania, New York, and Minnesota), and the critical role of transparency, data, and artificial intelligence in combating government waste. The conversation blends policy critique, investigative findings, and optimism for citizen-driven accountability.

Key Discussion Points & Insights

1. Medicaid Payment Explosion and Evidence of Fraud

• Massive Growth in Payments:
  • Over $270 million in Medicaid payments from 2018 to 2024 analyzed; dramatic increases, especially for personal assistant services.
  • Example: Pennsylvania saw a “more than 10,000% increase” in personal assistant service payments since 2018 ([03:17]).
• Fraudulent Schemes:
  • Notable case: Himal Patel, charged with wire fraud for setting up ghost home health care services and “milking billions out of the Medicaid system” ([04:01]).
  • These abuses are enabled by systemic flaws dating back decades: “Why have we set up a system that simply invites people to defraud it to the tune of hundreds of billions of dollars a year?” — John Hart ([04:32]).
• Incentive Structures:
  • Government spending described as the “least efficient” way to spend money (Milton Friedman box): “You spend someone else’s money on someone else.” ([04:55])
  • Hart emphasizes that the incentive structures of large bureaucracies “invite themselves to be gamed” ([07:15]).

2. Historical & Political Perspective on Government Waste

• Long-Standing Issue:
  • Reference to Senator William Proxmire’s “Golden Fleece Awards” for wasteful spending (1970s–80s), and the persistence of the problem ([07:19]).
  • Systemic issue exacerbated by expansion of the “administrative state” since early 20th century ([07:25]).
• Incremental Reform as a Path Forward:
  • Victory over earmarks came after years of incremental wins: “Earmarks are the gateway drug to Washington spending addiction” ([09:10]).
  • Fraud losses are “way more than the earmark problem...talking in the hundreds of billions of dollars” ([09:52]).
• Transparency as a Precondition for Reform:
  • “You have to win people’s trust and confidence by dealing with things like earmarks, by dealing with the stupidity of the examples that we highlighted in Pennsylvania. And then you set yourself up to really make the big reforms.” — John Hart ([11:54])

3. State-Level Deep Dives: Pennsylvania, New York, Minnesota, California

• Pennsylvania:
  • 10,000% increase in Medicaid personal assistant payments. Governor Josh Shapiro’s office declined to comment on the findings, raising questions about accountability ([04:01], [23:17], [24:37]).
• New York:
  • $72.7 billion spent on personal care assistants from 2018–2024; system permits elderly and disabled to hire family and friends, which is “especially popular in New York State." Kickback schemes like the “Royal Daycare Facility” in Flushing, Queens involved bribing patients to enroll ([13:23], [15:18]).
• Minnesota:
  • Notorious for rampant fraud, recently had $259 million in federal Medicaid payments paused until an anti-fraud plan is delivered ([18:25]).
  • Gov. Tim Walz implementing post-scandal reforms is compared to “JB Pritzker handing out diet tips” ([19:33]).
  • “The entire system was gamed and rigged to be exploited and, and used as a patronage vehicle.” — John Hart ([19:33], [21:05])
• California:
  • $127 billion in Medicaid payments (2018–2024); home health services “out of control,” loosening requirements and inviting fraud ([28:52]).
  • Not enough accountability; “uniparty government” leads to lack of transparency ([29:54]).

4. The Role of Data, Citizen Journalism, and AI

• Transparency Laws and Crowdsourced Oversight:
  • Reference to the Obama-Coburn transparency bill and the purpose of publishing government spending datasets ([16:54]).
  • Successful periods of spending reduction (e.g., Tea Party) came from grassroots pressure ([17:48]).
• Citizen Journalism:
  • Shift in investigative effort from “corporate news outlets” to local, independent, and citizen journalists ([30:33]).
• Artificial Intelligence:
  • Open the Books is developing AI tools for pattern recognition and public accessibility (“moneyball of politics” melding government data with public datasets) ([31:54], [33:33]).
  • “The best way to thwart a surveillance state is with a surveillance citizenry. And so we’re trying to create what we call super intelligent citizens…” — John Hart ([35:26])
  • Example: Using a phone to live-check a politician’s claims with their voting record in real time ([36:00]).

5. Ideas for Policy and Accountability

• Fraud Courts:
  • Suggestion (from a radio caller): Establish government fraud courts to expedite handling of fraud cases, similar to existing deportation courts ([27:17]).
  • John Hart supports the idea, noting the system’s inability to keep pace with the scale of fraud ([27:17]).
• Importance of Real-Time Data:
  • “There’s a move afoot...to do a serious upgrade to our transparency laws to create what we call real time transparency.” — John Hart ([43:34])
  • New laws could address reporting delays and increase agency accountability.

6. Broader Philosophical Reflections

• Changing Incentives and Public Attitudes:
  • Need to energize and equip ordinary citizens: “You don’t have to reach every single person in the country. If you get 10 or 20% of the public engaged, that’s more than enough to completely change the direction of the country” ([46:50]).
• Enduring Optimism:
  • Hart is “glass half full,” citing history of incremental progress and new tools for citizen engagement ([08:44], [46:50]).
• Historical Analogies:
  • Comparing outdated policies to “leeches in medicine”—practices we’ll one day see as obviously flawed ([47:46]).
  • “There are a whole lot of leeches in American politics sucking taxpayer money dry.” — Matt Kittle ([51:15]).

Notable Quotes & Memorable Moments

• On Systemic Vulnerability:
  “We have a federal government that is too big to succeed. And yes, we need to go after the fraud… But in the process of doing that I hope we get to this bigger conversation of how are we really going to get our arms wrapped around the safety net problem we have that’s the cause of our unsustainable debt…” — John Hart ([06:32])
• On Accountability:
  “Let that be a cautionary tale for anyone—any governor, any public official around the country—that if you play games with us, the technology is moving so fast that you are not going to be able to keep this hidden.” — John Hart ([20:02])
• On Real-Time Citizen Empowerment:
  “We’re trying to create what we call super intelligent citizens…so that they can have the power to hold government accountable.” — John Hart ([35:26])
• On Public Engagement:
  “You don’t have to reach every single person in the country. If you get 10 or 20% of the public engaged, that’s more than enough to completely change the direction of the country. That’s why I’m optimistic that in 10 years we could be having a different conversation.” — John Hart ([46:50])
• On Outdated Practices:
  “Every generation we look back at something we did 1500 years ago and think, how could we have been so stupid… But one of the things we look back on is the uses of leeches in medicine… There’s a lot of what we do now within public policy that we will look back on and think, I can’t believe we would use those leeches.” — John Hart ([47:49])

Timestamps for Key Segments

| Timestamp | Topic/Quote | |-----------|-------------| | 03:17 | Release and analysis of $270M in Medicaid payments data; 10,000% increase in PA | | 04:01 | Example of ghost home health care fraud (Himal Patel) | | 07:19 | Historical context: Proxmire’s “Golden Fleece” awards; bureaucratic expansion | | 09:38 | Incrementalism and the true scale of fraud (“hundreds of billions”) | | 13:23 | New York’s Medicaid system and examples of fraud | | 15:18 | Case study: Royal Daycare Facility’s $120M kickback scam | | 18:25 | Minnesota: Federal Medicaid funds paused over fraud concerns | | 19:33 | Critique of Gov. Walz’s response to anti-fraud measures | | 21:05 | On political patronage and accountability in Minnesota | | 27:17 | Proposal and discussion of government fraud courts | | 28:52 | California’s ballooning Medicaid spending and fraud | | 31:54 | Artificial intelligence as the next wave in fraud detection and transparency | | 35:26 | Building “super intelligent citizens” through AI and transparency tools | | 43:34 | Push for real-time transparency laws | | 47:49 | Analogy to “leeches in medicine” and the need to discard outdated policies |

Conclusion

This episode offers a comprehensive, data-driven critique of Medicaid fraud, exposing how systemic incentives in U.S. welfare programs foster waste and corruption. Through concrete state examples, the discussion underscores the need for greater transparency, the promise of technology (especially AI) in public oversight, and the growing power of informed, engaged citizens to drive reform and accountability. Hart and Kittle deliver their findings and insights with clarity, humor, and a dose of optimism, making complex policy issues accessible and compelling.

Listen for:

• Startling statistics about Medicaid's rapid spending growth in key states
• Explanations of how fraudulent schemes thrive in current systems
• How transparency laws, citizen journalism, and AI may change government accountability in the next decade

For charts, datasets, and further reading:
Visit Open the Books Substack and The Federalist’s Medicaid fraud coverage.