Erroneous payments by the U.S. government rose 18 percent last year, the government’s top auditor told a Senate committee Thursday morning.
The government made $124 billion in improper payments in fiscal 2014, according to Comptroller General Gene Dodaro. The payments were made through 124 programs across 22 government agencies, but the bulk came through the health insurance programs of Medicare and Medicaid and through the earned income tax credit program.
“Federal spending in Medicare and Medicaid is expected to significantly increase, so it is critical that actions are taken to reduce improper payments in these programs,” Dodaro told the Senate Finance Committee, saying that the agency running Medicare and Medicaid, the Centers for Medicare and Medicaid Services, hasn’t implemented many of his office’s recommendations for cutting errors.
“They’ve implemented some of the suggestions we had, but there are many they have not yet done,” Dodaro said.
Senators from both parties expressed frustration that the government hasn’t succeeded in cutting down on improper payments, despite numerous, specific recommendations from the Government Accountability Office over the last few years.
“It’s shocking to look at some of these numbers we see,” said Sen. Sherrod Brown, D-Ohio.
“Just think about what could be purchased with $125 billion,” said committee Chairman Orrin Hatch, R-Utah. “That amount would buy an iPad for every single American. It would buy every person in the country a year’s worth of meals at Chipotle. Or, to put it another way, $125 billion would be enough to pay for health insurance for every living person in Florida, our third most populous state.”
Sen. Ron Wyden of Oregon, the top Democrat on the committee, said it’s important to differentiate between improper payments, which are errors made by the government, and actual fraud, where taxpayers try to cash in on benefits they’re not entitled to. Each problem must be addressed in different ways, he stressed.
Improper payments, in which the government makes payments it shouldn’t, have several causes, including administrative and documentation errors, errors in determining whether a health service was medically necessary and a failure to verify that wage earners correctly reported their income.
Besides the problem of improper payments, there’s also a wide difference between the total taxes owed and what taxpayers actually pay on time, Dodaro said. The so-called “tax gap” is $385 billion annually, he said. That’s caused by taxpayers underreporting their tax liability, underpaying their taxes or not filing tax returns at all. Reducing the tax gap would increase the revenue coming into the federal government.
