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GAO: Welfare Waste Reaches $125 BILLION In 2014

Wasteful welfare payments rose significantly in 2014 to nearly $125 billion, largely because government agencies failed to share — or even assess — the basic information.

According to a Government Accountability Office report released Monday, “improper payment estimates totaled $124.7 billion in fiscal year 2014, a significant increase of approximately $19 billion from the prior year’s estimate of $105.8 billion,” while the government-wide error rate rose from 4 percent to 4.5 percent.

The huge amounts wasted social spending even dwarf the billions the military is struggling to cut while fighting abroad: Sequestration cuts are expected to average roughly $100 billion per year — or 4/5 of the money wasted here. (RELATED: Who’s to Blame for Sequestration? It Doesn’t Matter)

The GAO attributes most of the increase in wasteful spending to increased error rates in three major programs: Medicare, Medicaid and the Earned Income Tax Credit, which together accounted for $80.9 billion in improper payments– or approximately 65 percent of the government-wide total.

By far the largest source of improper payments, at $45.8 billion, was the Medicare program, which posted a 12.7 percent error rate. The EITC program had an even higher error rate of 27.2 percent, though its smaller budget means waste was limited to a still massive $17.7 billion. (RELATED: HHS Spent $62 Billion on Improper Payments in Health Care Spending Last Year)

Medicaid was not far behind, with $17.5 billion in improper payments, though its error rate was a comparatively smaller 6.7 percent. Conversely, the Social Security Administration’s (SSA) Old Age, Survivors, and Disability Insurance program had an almost-negligible error rate of 0.4 percent, leading to a still massive $3 billion in improper payments.

The contrast illustrates one of the main problems identified in the GAO report: “payments to deceased individuals that could have been prevented by using SSA death data.”

SSA is required to share its full death file, to the extent possible, with agencies that provide federally funded benefits, but in practice, these arrangements are often inhibited by various other statutory requirements, forcing many agencies to rely instead on the public Master Death File, “a subset of the full death file that does not include state-reported death data.”

“As the steward of taxpayer dollars, the federal government is accountable for how it spends hundreds of billions of taxpayer dollars annually,” the report notes, explaining that, “This includes safeguarding those expenditures against improper payments and establishing mechanisms to recover those funds when overpayments occur.”

Yet the report offers little optimism concerning the potential to recover improper payments, pointing out the difficulties of a “pay and chase” approach, and focuses most of its attention on encouraging agencies to avoid making the improper payments in the first place.

The Department of Agriculture, for instance, told the GAO that a provision of the Department of Agriculture Reorganization Act of 1994 “precluded the use of recovery auditing techniques,” preventing the agency from recovering improper payments more than 90 days after they are disbursed.

Similarly, the Department of Health and Human Services “reported that statutory limitations prevent the agency from requiring states to estimate improper payments for its Temporary Assistance for Needy Families program,” better known as food stamps. (RELATED: HHS Overpaid Millions of Tax Dollars on Medicare Payments … Again)

The report concludes by noting that outlays for several major programs, including Medicare and Medicaid, are expected to increase over the next few years, making the reduction of improper payments “critical” and highlighting the need not just for better interagency data-sharing, but also for better data collection to reduce inaccuracies.

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