Reported Improper Payment Estimates for Fiscal Year 2016

(CNSNews.com) – Improper payments by the federal government are costing taxpayers billions of dollars a year – more than a trillion, if you add them up over the years, Comptroller General Gene Dodaro told the Senate Budget Committee on Wednesday.

“These are payments that should not have been made or were made in the wrong amounts,” Dodaro said in his opening statement.

The problem is growing, he said, from $125 billion in 2014; to $137 billion in 2015; to the most recent estimate of $144 billion in 2016. “This includes estimates for 112 programs at 22 federal agencies, so it is a pervasive problem,” he added.

Since 2003 – when Congress required many executive departments and agencies to estimate the amount of improper payments annually – the cumulative total is estimated to be “in excess of $1.2 trillion,” Dodaro said. “So it’s a significant amount of money.”

Dodaro said three big federal programs – Medicare, Medicaid and the Earned Income Tax Credit -- account for most (75 percent) of the improper payments. “But there are a number of programs across government where this problem is an issue,” he said.

And the problem is worse than the numbers indicate, because 18 “risk-susceptible” programs – including Temporary Assistance for Needy Families -- do not report estimates at all. SNAP (food stamps) stopped reporting in 2015. And the $144 billion in 2016 does not include estimates from the Defense Department, which could be a sizeable number, Dodaro said.

Dodaro said the issue of improper payments “is an area that I believe requires additional and more aggressive congressional oversight.”

In the case of welfare payments – Temporary Assistance for Needy Families – Dodaro said the Department of Health and Human Services believes it lacks the statutory authority to ask the states for information to estimate improper payments.

“I think Congress should act statutorily to require the TANF program to develop an improper payment estimate,” Dodaro said. He noted that the HHS inspector general has recommended that Congress clarify that issue.

SNAP, the Supplemental Nutritional Assistance Program, reported improper payment estimates through 2015, “and then they identified a problem with the quality of the information” in 42 of the 53 states and territories. Dodaro said he expects SNAP to resume making estimates once they fix the problems.

The Defense Department’s estimates of improper payments “aren’t accurate” because the department does not “document the full universe of transactions.”

Sen. Chuck Grassley (R-Iowa) asked Dodaro how much of the improper payments stem from people defrauding the government versus “simple mistakes.”

“It's hard to estimate the amount of fraud. You know, all improper payments are not fraud but all fraud is an improper payment, by definition,” Dodaro replied. “So it's hard to estimate how much there are. But we know there are instances of fraud, particularly in the health care area, and it's very important that the agencies have due diligence over payments.”

Sen. John Boozman (R-Ark.) noted that the federal deficit for Fiscal 2016 was $587 billion. “Would it be accurate to say that this means that close to a quarter of our deficit in fiscal year '16 could be attributed to improper payments?” he asked Dodaro.

“The numbers work out that way,” Dodaro said. “You know, I'm not sure you could save all $144 billion at once. In fact, I don't think you could, based on the practices of the agencies. So I don't think we can solve our deficit by reducing improper payments alone.”

But Dodaro said reducing improper payments “would make it easier to deal with our long term problems," even if it won't solve them.



“But on the other side we've got a tax gap of over $400 billion on annual basis of revenue that should be coming in that's not. So we've got money going out the door that shouldn't and revenue coming in. Both of those things would help,” he said.