## Notes from 18 March 2026 [[2026-03-17|← Previous note]] ┃ [[2026-03-19|Next note →]] I read [[Luke Farrell]]'s [piece on the means-testing industrial complex](https://lpeproject.org/blog/the-means-testing-industrial-complex/) today, and it’s striking how private contractors have captured what should be basic government infrastructure in the US. ### The data tollbooth The core problem is straightforward: when you design safety net programs with complex eligibility rules, you create a constant need for income and employment verification. Because the US government doesn't have this data readily available in a unified way, states pay a company called **Equifax** between $5 and $19.39 every time they need to verify a resident's income. Equifax has cornered this market through exclusive deals with payroll companies, controlling data on 99 million workers. It is baffling that the government pays for data it should already possess. For comparison, Brazil’s **Cadastro Único** centralizes income data for over 100 million people. While the US federal government collects massive amounts of tax and wage data via the IRS and Social Security, the system is so fragmented that a state Medicaid office often cannot access it. Instead, they pay Equifax - sometimes multiple agencies pay for the same person’s data simultaneously. A recent budget bill doubled Medicaid redetermination frequency and added new work requirements. Equifax’s CEO celebrated this on an earnings call because it means states must pay them twice as often. The company earns $800 million in government contracts annually and recently announced $3 billion in stock buybacks. ### The software monopoly The second layer involves software contractors like **Deloitte**, which builds eligibility systems for these programs. Twenty-five states have Deloitte contracts worth at least $6 billion, with the federal government covering up to 90% of the cost. These systems are notoriously buggy and expensive. Farrell describes finding software errors that caused nearly 500,000 children to lose coverage improperly. While his team could fix these errors in minutes, contractors quoted hundreds of billable hours for the same work. This isn't a partnership; it is the outsourcing of core state functions to monopolists who profit from administrative complexity. ### The middleman incentive This structural vulnerability extends to service delivery. [[Matt Bruenig]]’s [analysis of the Minnesota fraud cases](https://www.theargumentmag.com/p/the-real-reason-behind-the-minnesota) highlights this. While viral narratives focused on immigration, the actual mechanism was standard: private providers claiming reimbursements for services never delivered. The incentive structure is the same everywhere: - A private entity receives government money to provide a service. - Profit is the inverse of money spent on that service. - The most efficient way to maximize profit is to provide no service at all. The largest Minnesota fraud (a $250 million scheme) was led by a woman named Aimee Bock, yet the public discourse remained fixated on cultural narratives. The real story is how weak, idiotic outsourcing frameworks create systematic opportunities for corruption, regardless of who is operating the scheme.