For decades, I led state health and human services agencies and dealt directly with federal bureaucracies that write the rules but rarely live with the consequences. I have seen honest public servants fight to protect taxpayers. I have also seen the dominant reality: fraud, waste, and abuse are not occasional glitches in the federal system. They are predictable outputs of a machine built to move money quickly, discourage oversight, and reward insiders. Take Medicaid. For 30 years, Washington has known that states keep paying benefits for people who are dead, then claim federal matching dollars anyway. The practice is so entrenched that even when watchdogs document it, the system shrugs and moves on. I laid out the history in “Medicaid’s 30 Year Refusal to Stop Funding the Dead.” And the mechanics are not speculative. The HHS Office of the Inspector General has repeatedly found wrong monthly payments to Medicaid managed care plans for people who were already dead, including a nationwide estimate of $207.5 million in unallowable payments in a single year. (RELATED: How Medicaid Made a Billion-Dollar Crime Inevitable) The point is that when Washington creates giant pipelines of money with weak verification and fragmented accountability, organized fraud will follow, and state and local governments are left managing the wreckage. Minnesota offers a different window into the same federal failure. The Feeding Our Future case was a roughly $250 million scheme that exploited a federally funded child nutrition program, and federal prosecutors have secured major convictions. The point is not to smear any community. The point is that when Washington creates giant pipelines of money with weak verification and fragmented accountability, organized fraud will follow, and state and local governments are left managing the wreckage. Now, suddenly, we are told Washington has “woken up.” The administration is invoking widespread fraud across federal programs and using that claim to justify extraordinary freezes and threats. HHS itself announced it was freezing billions in child care and family assistance grants to five states over fraud concerns. The Associated Press reports the administration is withholding social safety net funding from five states while demanding additional documentation to release funds. Reuters reports a federal judge temporarily blocked the freeze of more than $10 billion in child and family aid. Here is the uncomfortable truth. This is not a new discovery. Washington did not just learn yesterday that fraud exists. Inspectors general and auditors have been flagging these failures for years. The difference is not awareness. The difference is political theater and blunt force tactics that still avoid the root cause: a federal apparatus too big to control and too insulated to reform itself. (RELATED: Minnesota Welfare Scandal Is the Fraud Warning Americans Finally Noticed) The federal government is to blame for the larger mess across domestic policy. Immigration decisions made far from local communities create immediate costs at the state and municipal level: housing, emergency healthcare, schools, and law enforcement. Federal education policy bloats administration while outcomes stagnate. Public welfare programs, especially Medicaid, do not merely spend money; they shape entire state bureaucracies around compliance and claims-making instead of outcomes. Federal procurement feeds permanent industries: health, weapons, transportation, and the consulting layer that lives off all of them. (RELATED: Washington’s Reverse Midas Touch) When I led state agencies, the incentives were never subtle. Do not rock the boat. Do not slow the money. Do not design controls that might reduce enrollment. Do not ask for flexibility if the answer might be no. States are treated like contractors, not sovereign partners, except that, unlike contractors, states cannot walk away. They must comply, staff up, build systems, and absorb political fallout when the program fails in plain sight. Appointees arrive, discover where power and money flow, and then begin planning their next landing spot. The revolving door is an operating model. This is why agencies like the Centers for Medicare and Medicaid Services are structurally incapable of fixing the problems they have created. The bureaucracy is too large, too fragmented, and too protected. Appointees arrive, discover where power and money flow, and then begin planning their next landing spot. The revolving door is an operating model. And the lobbying class not only influences policy, it often writes it, markets it, and profits from it. No presidential administration or Congress is immune. The incentives capture everyone eventually. And there is another reason Washington will not simplify. Too many powerful interests profit from complexity. A sprawling federal program does not just produce benefits for recipients. It produces revenue streams for Medicaid middlemen, billing and compliance vendors, consultants, contractors, and lobbying shops whose business model depends on ever-thicker rulebooks and ever-larger appropriations. Complexity has become the market in Washington. The more opaque the system becomes, the easier it is for insiders and fraudsters alike to siphon money while taxpayers are told the solution is, once again, more bureaucracy. Meanwhile, the middle class pays for the entire circus. Healthcare, food, fuel, housing, and basic stability become less affordable, while Washington congratulates itself for new initiatives that mostly expand staffing and paperwork. And the national debt keeps climbing. The U.S. Treasury’s Fiscal Data site currently puts federal debt at about $38.43 trillion. (RELATED: Is the Middle Class ‘Shrinking’ or ‘Struggling’? The Difference Is Important.) This is exactly the sort of regime the American Revolution was fought against. The Founders detested distant rule, concentrated authority, and a governing class that taxed, regulated, and dispensed favors while ordinary families bore the costs. They rejected a system where decisions were made far from the people affected, by officials who did not answer to local communities. They warned that power accretes, factions form, and the public treasury becomes prey. Every action of the federal government has a negative reaction at the state and local levels. When Washington expands, states must expand to keep up with the chaos. More federal rules require more state compliance offices. More federal money requires more state claims and reporting. More federal mandates require more state administrators, lawyers, and contractors. The bureaucracy balloons in tandem, and citizens are told it is modern governance rather than the predictable result of centralization. So what do we do, beyond venting? If Washington is going to fund programs, it must stop subsidizing negligence. That means more frequent eligibility redeterminations and stricter verification in Medicaid, especially for able-bodied adults, and mandatory routine cross-checks against death data to stop payments for deceased enrollees. The new law in Republicans’ One Big Beautiful Bill requires quarterly audits against the Social Security Administration’s Full Death Master File starting in 2027, a recognition that the old trust model has failed. States with persistently high wrong payment rates should face real financial consequences, not polite letters and technical assistance. Washington must also stop encouraging financing gimmicks that inflate federal matching dollars without real state contributions. Hospital tax schemes and special payment deals used to draw more federal matching funds have become a cottage industry, and as long as the federal match is open-ended, the game will continue. The federal government cannot keep pretending it is buying integrity while rewarding manipulation. (RELATED: How Great Is the Great Healthcare Plan?) Across all programs, we need real work incentives and targeted enrollment, not permanent dependency and open-ended growth. Work requirements, properly designed with reasonable exemptions, are not a punishment. They are a boundary and a signal: benefits are a bridge, not a lifestyle. This is the moral logic of welfare reform aimed at independence and fiscal responsibility. We should also use modern tools to prevent fraud upstream rather than celebrate prosecutions after the money is gone. Review claims before paying them. Share data across states to stop duplicate enrollment. Build automated flags that catch suspicious patterns immediately. Prosecutions matter, but prevention is the only scalable strategy. Overall spending caps, block grants, or block grants with basic federal guardrails deserve serious consideration. Open-ended matching creates perverse incentives: expand rolls, expand claims, expand spending, then blame need. Fixed funding with flexibility changes the incentives. It caps federal exposure, reduces the over-enrollment temptation, and forces states to design programs that match local reality. Critics will warn about uneven outcomes, but the current system already produces uneven outcomes, plus fraud, plus exploding costs. Rhode Island achieved real success with a model like this in 2009. Their Global Waiver gave the state budget certainty through an overall spending cap and allowed faster program redesign without constant federal micromanagement. In its first three years, the waiver saved Rhode Island approximately $100 million while holding Medicaid spending far below what the old trajectory would have produced. Enforcement must be real. Dedicated anti-fraud units, clear audit authority, and tougher prosecutions matter. Even here, the federal government should follow best practice rather than improvisation. GAO’s fraud playbook is basic and correct: assess fraud risks, design an antifraud strategy, build controls that prevent and detect losses, and measure results. These approaches are not substitutes for the larger point. Ultimately, the only lasting solution is to shrink Washington’s role in domestic policy and return authority to states and localities where programs can be tailored, monitored, and corrected in real time. Welfare reform that genuinely empowers recipients and restores fiscal responsibility requires structural devolution, not just new slogans or new grant conditions. If Washington truly wants to fight fraud, waste, and abuse, it should begin with humility and subtraction. Fewer mandates. Fewer blank checks. Clear lines of accountability and performance measurement. Stronger state authority to design, verify, and enforce. Technology that prevents losses before they happen. Incentives that reward accuracy, not volume. The fraud is real. The waste is enormous. The abuse is chronic. But the deeper scandal is this: the system is working exactly as a bloated, centralized, incentive-driven bureaucracy will always work. The question is whether Americans are ready to admit that and demand a different design. READ MORE from Gary D. Alexander: Medicaid’s 30-Year Refusal to Stop Funding the Dead The ACA’s Unraveling: Fifteen Years of Unintended Consequences The Bureaucracy Has Become the Mission Gary D. Alexander served as Rhode Island’s and Pennsylvania’s secretary of health and human services.