Minnesota’s burgeoning social services fraud scandal is “disgusting,” and emblematic of a broader nationwide crisis, a former National Economic Council health policy official told Fox News Digital.

Brian Blase, president of the federal spending-focused Paragon Health Institute, said in a Friday interview that fraud has become pervasive throughout such publicly funded programs, and that a lot of the time, funds mismanaged by state officials are often federally sourced – meaning the entire nation can be hurt by one state’s scandal.

“It is disgusting,” he said when asked about the alleged Minnesota scandals. “But it is pervasive throughout government programs.”

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“Federal taxpayers that are paying for the poor management, oversight and just disruption at the state and local levels. The Medicaid program in particular, the more states spend, the more money that they get from the federal government,” he said. “It’s the number-one source of how states get money from Washington.”

Blase said three-fifths of all federal dollars to state governments come through Medicaid, leading special interests to continue to lobby for more – and states like Minnesota don’t have adequate incentives to follow the money once it gets to them.

He previously tweeted that $1 trillion in improper payments have been made in the past 10 years. 

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All “the fraud in Minnesota and similar fraud in other states almost certainly isn’t counted in those estimates,” he said. 

Medicaid growth has often come through expansion of services that aren’t directly medical treatments, he said, noting that the funds can now be spent in approved contexts on housing, food and nonemergency transportation.

Those “are ripe with waste, fraud or abuse opportunities,” he said, as federal prosecutors said in December they estimate at least half of Minnesota’s $18 billion Medicaid-funded disbursements are actually fraudulent, according to the Minnesota Star-Tribune.

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Blase’s think tank has been delving into issues with Obamacare, which became a congressional albatross as Democrats fought the GOP majority to keep burgeoning subsidies flowing as a year-end deadline neared.

Paragon “has done a lot of work on enrollment fraud in Obamacare, called the ‘Great Obamocare Enrollment Fraud’ – and it is not specific to Minnesota. That fraud exists across the country, and the main reason is because of bad policy during the Biden administration,” he said.

Blase said Biden-era subsidy expansions made many Obamacare plans fully taxpayer-subsidized, creating incentives for brokers and insurers to maximize enrollments regardless of legitimacy.

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That, he said, has led to “unscrupulous” Obamacare brokerages and “enrollment conglomerates” cropping up with a business model essentially based on getting as many people to sign up for Obamacare so they receive the payments.

Blase recently retweeted a post citing a Nevada resident who had no idea they were signed up for an Obamacare plan by the state exchange in Carson City, partially because they didn’t have a premium or a bill.

“It just happened,” the follower said. “They automatically shopped for a plan and enrolled me into it, too.”

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Blase said the dynamic has led to a surge in Obamacare enrollees who have never actually used their health care plan, adding that $35 billion in 2024 taxpayer subsidies funded people who didn’t use services.

“Some (enrollees) are fictitious, others individuals that aren’t aware that they’re enrolled,” he said.

“The connection with Minnesota, with Obamacare, are terrible incentives that are produced from these government programs that allow people to get rich at the taxpayer expense.”

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So-called “phantom enrollments” also have popped up in earnest through social media ads from such brokerages or intermediaries visiting homeless camps and the like to get names and information to bolster their rolls.

When asked what concerned Americans can do to check if they’ve been involuntarily enrolled in an Obamacare plan that costs them nothing but drains taxpayer funds, Blase said they might be able to call their state health care authority, but suggested there isn’t a clear route to go.

“What we need is better government policy, so these subsidies can’t be constructed to make the plans 100% paid by taxpayers,” he said. “All the enrollees need to pay something for their coverage – that’s part of a minimum of what the accountability should be.”

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“A lot of the issues are the government just sends the payments directly to the providers. They don’t go to the patients.”

He said President Donald Trump has advocated for changing that dynamic and cutting the insurance companies out of direct cash flow, giving the consumer control and coincidentally clipping some of the alleged fraud.

While then-Sen. John McCain, R-Ariz., famously tanked Republicans’ closest bid to successfully repeal Obamacare, Blase said such a bill remains “politically implausible.”

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Blase said Congress should expand non-Obamacare options, including allowing small businesses to band together and expanding health savings accounts.

“There’s also options outside of Obamacare that are much more flexible and affordable,” he said. “Families should be able to finance their healthcare, spend their own money on their healthcare and their health coverage the way that they want.” 

“And then within Obamacare, there’s so much spending,” he said. “We can take a portion of this spending and give it to individuals so that they have control in a health savings account so that they can use the coverage and they can use federal money in the ways that work best for them.” 

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Several lawmakers, including Reps. Blake Moore, R-Utah, Gus Bilirakis, R-Fla., and Lloyd Smucker, R-Pa., have advocated for expanding health savings account access, according to reports.

On the Democratic side, some lawmakers defended Obamacare subsidies continuing to flow, including Sen. Peter Welch of Vermont.

Welch said there are a number of bipartisan lawmakers who see “what a disaster [letting subsidies expire] will be for families that they represent.”

“We could extend the credits for a couple of years, we could reform it,” he told Tampa’s NPR affiliate. “You could put an income cap, you could have a copay, you could have penalties on insurers who commit fraud. You actually could introduce some cost-saving reductions that have bipartisan support.”

Fox News Digital’s Kiera McDonald contributed to this report.