In news that probably won’t surprise anyone, the government has revealed that it makes roughly $100 billion in improper payments to people who may not be entitled to them – every YEAR.
The improper payments came in the forms of tax credits to families that didn’t qualify, unemployment benefits to people who had jobs and medical payments for treatments that might not have been necessary.
In 2013, improper payments totaled approximately $106 billion – and experts say that figure could actually be higher. Rep. John Mica, R-Fla, chairs the House Oversight subcommittee on government operations. He told the AP the amounts are “staggering”:
“Nobody knows exactly how much taxpayer money is wasted through improper payments, but the federal government’s own astounding estimate is more than half a trillion dollars over the past five years. The fact is, improper payments are staggeringly high in programs designed to help those most in need – children, seniors and low-income families.”
The government-run website Payment Accuracy explains how improper payments occur:
- funds go to the wrong recipient;
- the right recipient receives the incorrect amount of funds (including overpayments and underpayments);
- documentation is not available to support a payment; or
- the recipient uses funds in an improper manner.
That website also lists the state and federal programs that are known for high error rates:
High-error state-administered programs include:
- Unemployment Insurance (UI)
- Supplemental Nutrition Assistance Program (SNAP)
- National School Lunch Program
- Rental Housing Assistance
High-error federally-administered programs include:
- Medicare FFS
- Medicare Advantage (Part C)
- Medicare Prescription Drug Benefit (Part D)
- Supplemental Security Income (SSI)
- Retirement, Survivors, and Disability Insurance (RSDI)
- Pell Grants
Causes of improper payments fall into three categories: documentation and administrative errors, authentication and medical necessity errors, and verification errors.
The government claims most errors are made unintentionally and do not represent fraud.
Guess which source of improper payments is the largest?
According to agency estimates, the winner is government health care programs:
Medicare’s various health insurance programs for older Americans accounted for $50 billion in improper payments in the 2013 budget year, far exceeding any other program.
Most of the payments were deemed improper because they were issued without proper documentation, said Shantanu Agrawal, a deputy administrator for the Centers for Medicare & Medicaid Services. In some cases, the paperwork didn’t verify that services were medically necessary.
“Payments deemed ‘improper’ under these circumstances tend to be the result of documentation and coding errors made by the provider as opposed to payments made for inappropriate claims,” Agrawal said. (source)
Medicaid improper payments exceeded $14.4 BILLION in 2013. And this program is expanding under Obamacare!
Naturally, many of the improper payments come from the IRS.
IRS Commissioner John Koskinen said the issue is important to the IRS, and that it is an “ongoing battle”:
“It’s an unacceptable rate of improper payments, an unacceptable rate of dollars out the door, and we need to do whatever we can to make a dent in it.”
The Earned Income Tax Credit (EITC) is a major culprit here – it paid out $14.5 BILLION in improper payments last year, which represents 24% of all payments under that program:
The tax credit is one of the largest anti-poverty programs in the U.S., providing $60.3 billion in payments last year. Eligibility depends on income and family size, making it complicated to apply for the credit — and difficult to enforce — Koskinen said.
People get credits they don’t deserve by claiming children they don’t have or misreporting their income or filing status, Koskinen said.
Koskinen also said it will be challenging for the IRS to make improvements due to its lack of adequate funding:
“I remain concerned about our ability to continue to make progress in all of these areas in light of our ongoing difficult budget environment.”
The IRS says its 2014 budget of $11.29 billion is $850 million below the funding it received in 2010, despite the surging fraud and identity theft that is leading to many improper payments.
How is the IRS going to administer the ACA if they already can’t handle their workload? Larger programs typically result in less oversight and more corruption. If the agency can’t run on a $11.29 BILLION budget and is rampant with issues already, how is it going to manage the monstrous behemoth that is Obamacare?
When the IRS scandal broke last year, Dr. Ron Paul said the following about the agency:
“The federal government will get along just fine without its immoral claim on the fruits of our labor, particularly if the elimination of federal income taxes are accompanied by serious reduction in all areas of spending, starting with the military spending beloved by so many who claim to be opponents of high taxes and big government.
While it is important for Congress to investigate the most recent scandal and ensure all involved are held accountable, we cannot pretend that the problem is a few bad actors. The very purpose of the IRS is to transfer wealth from one group to another while violating our liberties in the process, thus the only way Congress can protect our freedoms is to repeal the income tax and shutter the doors of the IRS once and for all.”
Although government waste is not limited to the IRS, abolishing it would be a good start, as the agency is bloated with power and corruption and has a disturbing history of wasting of taxpayer money (money that many would say the agency has no right to in the first place).
The need to repeal Obamacare is becoming more and more apparent as well.
Perhaps the federal government-operated Payment Accuracy website said it best:
All improper payments degrade the integrity of government programs and compromise citizens’ trust in government.
There you have it – straight from the horse’s mouth.
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