A trillion dollars of waste, fraud, and abuse

  • 29 July 2016
  • NormanL
A trillion dollars of waste, fraud, and abuse

It's commonplace for advocates of bigger, more intrusive, more expensive government to laugh at those who say the government is still plagued by waste, fraud, and abuse. We wonder what they say in light of a GAO report which says the United States government made over $136 billion in "improper payments" in 2015 -- and more than a trillion dollars in such payments since 2003:

Improper payments have consistently been a government-wide issue despite efforts to identify their root causes and reduce them. Examples of past improper payments include erroneous payments made by (1) the Department of Agriculture’s National School Lunch program due to verification and authentication errors, including inadequate documentation and fraud or misrepresentation by participants;  (2) the Department of Labor’s Unemployment Insurance program due to eligibility errors in handling separation issues, and claimants who have returned to work and continue to claim benefits; and (3) the Department of Health and Human Services’ Medicare Fee-for-Service program due to medically unnecessary services and insufficient documentation.

The government’s ability to understand the scope of the issue is hindered by incomplete, unreliable, or understated estimates; risk assessments that may not accurately assess the risk of improper payment; and noncompliance with criteria listed in federal law. GAO has reported improper payments as a material weakness in internal control in its reports on the U.S. government’s consolidated financial statements.

Since fiscal year 2003—when certain agencies were required by statute to begin reporting improper payments—cumulative improper payment estimates have totaled over $1 trillion. The improper payment estimate in fiscal year 2015, attributable to 121 programs across 22 agencies, was $136.7 billion, up from $124.6 billion in fiscal year 2014. The $12 billion increase was primarily due to estimated improper payments for the Medicaid program. As shown in the figure, the Medicare, Medicaid, and Earned Income Tax Credit programs account for over 76 percent of the government-wide improper payment estimate.  Federal spending for Medicare and Medicaid is expected to significantly increase, so it is critical to take actions to reduce improper payments in these programs.

Note that these GAO estimates don't include the Department of Defense because, the GAO says DoD accountants were, "unable to reconcile outlays and ensure that all payments subject to improper payment estimation requirements were captured for review."

Is a lot of federal money wasted, or simply stolen, every year? Absolutely. Perhaps it's not enough to balance the government's books, but it is large enough -- and growing fast enough -- to warrant genuine, immediate concern.