In this episode, Patrick McKenzie (patio11) is joined by economist and fraud researcher Professor Jetson Luis-Leder to examine the systemic issues underlying government program fraud. Jetson and Patrick discuss healthcare fraud cases, including hospice eligibility manipulation and ambulance transport schemes, and other fraud practices against unemployment and the PPP program. The discussion reveals how institutional constraints, technological limitations, and policy design choices create opportunities for both beneficial and harmful rule violations. They also analyze the ROI of fraud prevention measures, the effectiveness of whistleblower incentives, and how bureaucratic systems can be redesigned to prevent abuse.

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Full transcript available here: https://www.complexsystemspodcast.com/defrauding-government-jetson-leder-luis

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Links:

Jetson's website: https://sites.bu.edu/jetson/
Paper: Ambulance Taxis by Jetson Leder-Luis Ambulance Taxis: The Impact of Regulation and Litigation on Health Care Fraud
Paper: Did FinTech Lenders Facilitate PPP Fraud by John M Griffin, Samuel Kruger, Prateek Mahajan https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3906395
Paper: Is Fraud Contagious by John M Griffin https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4599654
Paper: Unemployment Insurance Fraud in the Debit Card Market by Jetson Leder-Luis with Umang Khetan, Yunrong Zhou and Jialan Wang https://www.nber.org/papers/w32527
Book: Recoding America by Jennifer Pahlka https://www.amazon.com/Recoding-America-Government-Failing-Digital-ebook/dp/B0B8644ZGY
Podcast: Jennifer Pahlka on Ezra Klein
https://open.spotify.com/episode/2VPErCIG1pbcnYFBojrKcG
Podcast: Dave Guarino on Odd Lots https://open.spotify.com/episode/43HI3NuxZGsl13U365xZxa
Bits About Money https://www.bitsaboutmoney.com/
Related Complex Systems episodes: Dan Davies and Dave Guarino's episodes

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Twitter:
@patio11

@jetson_econ

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Timestamps:

(00:00) Intro

(02:04) Overview of Medicare/Medicaid

(02:41) Estimated $50-100B fraud losses

(03:31) Taxonomy of healthcare fraud

(08:04) Hospice fraud; potentially saved money

(16:33) A $10 billion asterisk: ambulances for dialysis patients

(21:30) Sponsors: Work OS | Check

(24:45) Complexities of fraud detection and prevention

(39:02) Pandemic fraud

(41:34) Findings on PPP loans fraud

(48:19) Supply chain of fraud

(52:06) Policy and enforcement challenges

(01:08:32) Whistleblower programs

(01:14:54) Final thoughts

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