GAO says at least $136 billion in improper payments made by government

The Government Accountability Office released a report showing that $136 billion in improper payments were made by government.

An improper payment occurs "when funds go to the wrong recipient, when a recipient receives too little or too much money, when payment documentation is not available, or when 'the recipient uses federal funds in an improper manner,'" according to the government's Payment Accuracy website.

The GAO was careful to point out that the actual amount of improper payments is probably much higher.

Washington Free Beacon:

Using GAO’s estimate of $136.7 billion in improper payments at a 4.8 percent error rate, approximately $2.85 trillion in federal spending was reported. But the federal budget in fiscal 2015was $3.69 trillion—nearly one-third more than the $2.85 trillion reported for analysis.

Veronique de Rugy, a senior research fellow at the Mercatus Center, praised the GAO for being transparent about the limitations of its analysis but criticized the incomplete nature of the federal government’s auditing and accountability for its spending.

The GAO “only looks at improper payments as defined by” the 2002 law and subsequent 2010 and 2012 laws, de Rugy said. She pointed to the “expansion of eligibility” for food stamps as an example of how low standards for eligibility mean money is being wasted, while not being counted as improper payments.

The current definition of improper payments “doesn’t tell you anything about the legitimacy of the part that’s not improperly paid. It’s so incredibly ridiculous,” said de Rugy, who last month charted out the programs with the greatest losses of taxpayer money.

“It tells you a lot about why Medicare is in a position to act about it has actually very low administrative costs,” de Rugy said. “It’s easy to have low administrative costs when you don’t try to prevent improper payments, waste, fraud, and abuse.”  

And that's the bottom line.  In the private sector, due diligence is performed to make sure company money goes to the proper vendor in the proper amount.

But there is no incentive to perform due diligence in government.  The bureaucrat is paid whether the payment is proper or not.  There is no chance a careless government worker will lose his job. 

And, as de Rugy points out, the government agency itself is slipshod because stopping improper payments is not a priority.

July 2015 analysis by the Kaiser Family Foundation projected that Medicare’s spending totalled $527 billion in 2015 and $560 billion in 2016.

Beryl Davis, the GAO Director of Financial Management and Assurance,  highlighted that more than three-quarters of improper payments come from Medicare, Medicaid, and the Earned Income Tax Credit.

The $12 billion increase in improper payments from 2014 to 2015 was mostly attributable to Medicaid, Davis told the Free Beacon.  

Medicaid is run by the states, but the federal government reimburses states for much of the cost of the program.  The problem is, the states are even more lax about improper payments than the feds.  An audit in 2013 of the Illinois Medicaid rolls found that more than half of the 2.7 million enrollees were ineligible to recieve benefits.  Another $12 billion went to the dead.

And that's just one state.

Until the culture of the bureaucracy undergoes a massive reformation, these overpayments will likely grow, wasting taxpayer money while making the deficit far higher than it has to be.

The Government Accountability Office released a report showing that $136 billion in improper payments were made by government.

An improper payment occurs "when funds go to the wrong recipient, when a recipient receives too little or too much money, when payment documentation is not available, or when 'the recipient uses federal funds in an improper manner,'" according to the government's Payment Accuracy website.

The GAO was careful to point out that the actual amount of improper payments is probably much higher.

Washington Free Beacon:

Using GAO’s estimate of $136.7 billion in improper payments at a 4.8 percent error rate, approximately $2.85 trillion in federal spending was reported. But the federal budget in fiscal 2015was $3.69 trillion—nearly one-third more than the $2.85 trillion reported for analysis.

Veronique de Rugy, a senior research fellow at the Mercatus Center, praised the GAO for being transparent about the limitations of its analysis but criticized the incomplete nature of the federal government’s auditing and accountability for its spending.

The GAO “only looks at improper payments as defined by” the 2002 law and subsequent 2010 and 2012 laws, de Rugy said. She pointed to the “expansion of eligibility” for food stamps as an example of how low standards for eligibility mean money is being wasted, while not being counted as improper payments.

The current definition of improper payments “doesn’t tell you anything about the legitimacy of the part that’s not improperly paid. It’s so incredibly ridiculous,” said de Rugy, who last month charted out the programs with the greatest losses of taxpayer money.

“It tells you a lot about why Medicare is in a position to act about it has actually very low administrative costs,” de Rugy said. “It’s easy to have low administrative costs when you don’t try to prevent improper payments, waste, fraud, and abuse.”  

And that's the bottom line.  In the private sector, due diligence is performed to make sure company money goes to the proper vendor in the proper amount.

But there is no incentive to perform due diligence in government.  The bureaucrat is paid whether the payment is proper or not.  There is no chance a careless government worker will lose his job. 

And, as de Rugy points out, the government agency itself is slipshod because stopping improper payments is not a priority.

July 2015 analysis by the Kaiser Family Foundation projected that Medicare’s spending totalled $527 billion in 2015 and $560 billion in 2016.

Beryl Davis, the GAO Director of Financial Management and Assurance,  highlighted that more than three-quarters of improper payments come from Medicare, Medicaid, and the Earned Income Tax Credit.

The $12 billion increase in improper payments from 2014 to 2015 was mostly attributable to Medicaid, Davis told the Free Beacon.  

Medicaid is run by the states, but the federal government reimburses states for much of the cost of the program.  The problem is, the states are even more lax about improper payments than the feds.  An audit in 2013 of the Illinois Medicaid rolls found that more than half of the 2.7 million enrollees were ineligible to recieve benefits.  Another $12 billion went to the dead.

And that's just one state.

Until the culture of the bureaucracy undergoes a massive reformation, these overpayments will likely grow, wasting taxpayer money while making the deficit far higher than it has to be.