The federal government wasted as much as $247 billion in payment errors during fiscal year 2022, according to a report from the Government Accountability Office released at the end of last month.
The agency defines payment errors as “overpayments or payments that should not have been made,” such as those issued to deceased individuals or former beneficiaries no longer eligible for relevant programs. The report comes as the national debt approaches $31.7 trillion. The agency added that incorrect payments are a “long-standing issue” which have cost the federal government $2.4 trillion over the past two decades.
Some 51% of the payment errors were made by Medicaid and Medicare, the federal programs which provide health insurance for low-income households and seniors, respectively. The former reported $80.6 billion in payment errors, while the latter reported $46.8 billion.
“Medicare could improve communication around its prior authorization program. This program requires that beneficiaries get approval before receiving certain items like powered wheelchairs, and it could reduce expenses and improper payments,” the Government Accountability Office recommended. “Medicaid could improve oversight to ensure that claims aren’t paid to ineligible medical providers, including those who have suspended or revoked medical licenses.”
The Paycheck Protection Program, an initiative launched three years ago to subsidize businesses that retained their employees amid the lockdown-induced recession, accounted for a reported $29 billion in payment errors last year. Fraud with respect to pandemic-era payments has cost taxpayers considerable sums: criminals may have stolen as much as $60 billion from the unemployment programs enacted by the stimulus bills, according to another report from the Government Accountability Office, while other estimates say that as much as $400 billion, equivalent to half of the total unemployment funds approved by the federal government, was lost to fraud.
Payment errors with respect to federal Unemployment Insurance, which provides benefits to individuals who lose their positions, and the Earned Income Tax Credit, a refundable tax benefit for low-income and moderate-income households, amounted to $18.9 billion and $18.2 billion. Fraud related to the former program emerged as beneficiaries continued to “claim benefits after returning to work” and employers failed to “provide timely and adequate information on reasons for employee departures,” while the Government Accountability Office recommended that the IRS more carefully examine W-2 filings before issuing tax refunds.
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The dismal report on federal payment errors comes as lawmakers battle over the debt ceiling, a policy established by Congress that prevents the federal government from spending beyond the predetermined national debt limit of $31.4 trillion after the threshold was surpassed earlier this year. Treasury Secretary Janet Yellen warned lawmakers that she was forced to implement “extraordinary measures” to fund federal agencies until early June, after which the government will default on obligations unless lawmakers suspend or raise the debt limit.
House Speaker Kevin McCarthy (R-CA) delivered a speech on Monday that called for restoring work requirements to ensure that “able-bodied adults without dependents” remain in the workforce as part of a broader package that ties an increase in the debt limit to spending caps on the federal budget. Senate Majority Leader Chuck Schumer (D-NY) dismissed the speech from McCarthy, asserting that the lawmaker “continues to bumble us toward a catastrophic default that would cause the economy to crash, spike job loss, and raise costs for American families.”