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Federal Government Loses Hundreds of Billions Annually to Fraud and Improper Payments, GAO Reports
A new report from the Government Accountability Office (GAO) reveals the federal government is hemorrhaging between $233 billion and $521 billion annually due to fraud, based on data collected between fiscal years 2018 and 2022. This staggering financial drain on taxpayer resources highlights significant vulnerabilities across government payment systems.
The report further indicates that improper payments—defined as funds that should never have been disbursed or were paid in incorrect amounts—have accumulated to approximately $2.8 trillion since 2003, representing one of the most persistent financial management challenges facing the federal government.
In fiscal year 2024 alone, federal agencies reported $162 billion in improper payments across 68 different programs. What’s particularly concerning is the concentration of these losses, with 75% of all improper payments originating from just five program areas: Medicare, Medicaid, Supplemental Nutrition Assistance Program (SNAP) benefits, Earned Income Tax Credits, and the Restaurant Revitalization Fund.
Medicare stands out as the most problematic program, accounting for 34% of all improper payments. This raises serious questions about the effectiveness of existing controls within the Centers for Medicare & Medicaid Services (CMS), which oversees a program providing healthcare coverage to more than 65 million Americans.
The financial magnitude of these losses equals or exceeds the annual budgets of major federal departments. For context, the entire Department of Education’s fiscal year 2024 budget request was $90 billion—significantly less than what the government loses to improper payments each year.
While the GAO report acknowledges the potential of artificial intelligence to help combat these issues, it cautions against viewing AI as a panacea. “Any AI solution is only as good as the data it’s built upon,” the report explains, emphasizing that technology alone cannot solve structural problems in federal payment systems.
“Having solid, reliable data and a human in the loop to ensure data reliability and appropriate application of the technology is essential,” the GAO states. Without these safeguards, AI systems could potentially amplify existing errors or introduce new problems into already vulnerable systems.
The report also outlines straightforward non-technological measures that could immediately reduce improper payments. One recommendation urges Congress to permanently require the Social Security Administration to share comprehensive death data with the Treasury Department’s “Do Not Pay” system. This simple fix would prevent payments to deceased individuals—a persistent source of fraud and waste.
Financial oversight experts have long criticized the government’s approach to improper payments. “These numbers represent real taxpayer money that could be funding critical services,” said Howard Arp, Director of Forensic Audits at GAO, in a previous Congressional testimony. “Every dollar lost to improper payments is a dollar not available for its intended purpose.”
The timing of this report is particularly relevant as federal agencies face increasing pressure to demonstrate fiscal responsibility amid growing national debt concerns. The U.S. national debt recently surpassed $34 trillion, making efficient management of existing resources more critical than ever.
The GAO’s findings also arrive as Congress debates additional funding for various government programs. These documented inefficiencies will likely feature prominently in upcoming budget negotiations, potentially affecting appropriations for the programs identified as most problematic.
As federal agencies work to address these issues, the GAO emphasizes that success will require a multi-faceted approach combining better data management, enhanced human oversight, strategic deployment of technology, and legislative changes to close loopholes that enable fraud and waste.
The full GAO report includes detailed recommendations for each major program area and emphasizes that reducing these losses represents a rare opportunity for bipartisan cooperation in an otherwise politically divided Washington.
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9 Comments
It’s disheartening to see so much abuse of government programs intended to help people. This highlights the need for more robust oversight and accountability measures to protect taxpayer dollars. I hope the GAO report leads to real reforms.
This highlights the importance of robust internal controls and auditing processes, especially in high-risk, high-dollar government programs. Identifying vulnerabilities early and addressing them proactively can go a long way in preventing fraud.
As someone with an interest in the uranium and lithium markets, I’ll be watching closely to see if any of the fraud issues uncovered extend to those critical mineral supply chains. Maintaining integrity in those sectors is vital for national security.
As someone who works in the mining and commodities sector, I’m curious to see if any of these fraud issues touch on the raw materials supply chain. Transparency and accountability are vital in that industry as well.
The scale of these losses is really staggering. I hope the GAO recommendations spur meaningful reforms to plug the holes and recover as much of that money as possible. Taxpayers deserve better stewardship of their hard-earned dollars.
This is a disheartening report, but I’m glad the GAO is shining a light on these problems. Rooting out fraud and mismanagement should be a top priority to ensure taxpayer dollars are being used responsibly and effectively.
This is really troubling, especially the concentration of losses in major programs like Medicare and SNAP. It undermines public trust when so much money is being lost to fraud and mismanagement. I hope the government acts quickly to stem the bleeding.
Wow, this is a concerning report. Billions in fraud and improper payments is a massive drain on taxpayer resources. I wonder what specific steps the government plans to take to shore up these vulnerabilities and recover those funds.
I’m curious to learn more about the root causes of this problem. Is it primarily due to lax controls, lack of verification, or intentional fraud? Understanding the drivers is key to developing effective solutions.