Silicon Valley might be hunting unicorns in the wrong places.

According to one top federal health official, entrepreneurs and investors are overlooking one massive population: Low-income Americans who qualify for Medicaid.

That's a big mistake, given that new funds are available for those that are bringing IT innovation to the space, said Medicaid chief medical officer Andrey Ostrovsky.

"My gut is that it's a big opportunity with $500 billion in federal spend every year in a system that hasn't evolved technologically much since 1965," Ostrovsky said.

"There are unicorns sitting in there," he added.

Ostrovsky, a doctor and former health entrepreneur, hit the headlines in March for speaking out against the Republican plan to replace Obamacare, despite the potential fallout from his political bosses. He describes that decision as one that was "morally necessary," as he took a Hippocratic oath to protect patients.

Ostrovsky said he grew up in project housing in Baltimore, Maryland. His family was reliant on Medicaid for three years.

These days, he spends a lot of time thinking about how he got out of the projects and become a successful doctor, while many of his childhood friends did not. And he regularly takes his five-year-old son to homeless shelters to "interact with fellow human beings who have the cards stacked up against them."