A recent Government Accountability Office (GAO) report has estimated that the federal government has lost a staggering $2.7 trillion in taxpayer funds because of fraud and other types of improper payments over the past two decades, underscoring a long-standing problem of safeguarding taxpayer funds.
The report, released on Sept. 10, indicates that these improper payments—funds disbursed incorrectly or fraudulently—pose a significant financial drain and are a major vulnerability in the government’s fiscal oversight. In 2023, improper payments across federal agencies amounted to $236 billion.
The report estimates that since 2003, the cumulative total of improper payments has hit a staggering $2.7 trillion. It also estimates that the federal government is currently losing between $233 billion and $521 billion annually in taxpayer dollars.
Six key programs were responsible for about $200 billion of the total estimated $236 billion in improper payments last year: Medicare ($51.1 billion), Medicaid ($50.3 billion), Pandemic Unemployment Assistance ($48 billion), Paycheck Protection Program Loan Forgiveness ($23 billion), Earned Income Tax Credit ($22 billion), and Supplemental Security Income ($5 billion).
These six programs are either currently on GAO’s High Risk List—a designation that indicates vulnerabilities to fraud, waste, abuse, and mismanagement—or have been on the list in recent years.
Orice Williams Brown, the GAO’s chief operating officer, testified on the matter during a Sept. 10 hearing before the House Government Operations and the Federal Workforce Subcommittee, saying that reducing improper payments is important to help lower the deficit.
“Given the current fiscal environment, addressing improper payments and fraud in these six program areas is essential,” Brown stated in written testimony.
He pointed to the GAO’s most recent report on the nation’s fiscal health, which noted that the federal government faces an unsustainable long-term fiscal outlook, driven by rising spending in health care, interest on debt, and Social Security.
The fiscal health report, which warned that the unsustainable path poses “serious economic, security, and social challenges” if not addressed, highlighted the importance of strengthening payment integrity, including reducing improper payments, as a way to help to reduce the deficit.
“Any dollar that is improperly paid or defrauded results in one less dollar going to an eligible beneficiary or for another beneficial purpose,” Brown said during the hearing.
While federal agencies have made progress in implementing the GAO’s recommendations for the six program areas, Brown said they can do more to improve payment integrity and address the dozen or so remaining unimplemented recommendations.
He said Congress could use a range of tools, such as hearings, appropriations, and scorecards, to enhance oversight and encourage federal agencies to improve program integrity and reduce fraud. Scorecards, for instance, would allow Congress to track agency performance in detecting, preventing, and recovering improper payments.
Brown also urged lawmakers to reinstate a requirement for agencies to report on their antifraud controls and fraud risk-management efforts in their annual reports.
“Such reporting will increase congressional oversight to better ensure fraud prevention during normal operations and emergencies,” he stated in written testimony.
Other recommendations include the establishment of a permanent “analytic center of excellence” to assist oversight agencies in identifying improper payments and fraud, as well as amending the Social Security Act to make the sharing of full death data between the Social Security Administration and the Treasury’s Do Not Pay system a permanent requirement. The former measure would enhance the government’s ability to deploy advanced analytics to prevent fraud, while the latter would reduce the risk of improper payments to ineligible participants by ensuring that deceased individuals are consistently removed from payment systems.
Michael Horowitz, inspector general of the Department of Justice and chair of the Pandemic Response Accountability Committee, also testified at the Sept. 10 hearing. He said that the establishment of a permanent analytic center would result in at least $1 billion in financial benefits each year by helping identify fraudsters before they can defraud multiple federal programs.
“This ability is important because fraudsters do not typically target just one government program,” Horowitz said. “They focus their efforts on any and all government programs from which they can easily steal money.”
