The Government’s $125 Billion Improper Payments Problem

Despite the Obama administration’s attempts to curb the billions of improper payments federal agencies dole out each year, the problem is actually getting worse.

In 2014 alone, agencies paid a whopping $125 billion in improper or erroneous benefit payments through some of the largest government programs like Medicare, Medicaid and Social Security. That’s the most ever recorded — and a $19 billion increase from the previous year, according to a new report from the Government Accountability Office. For context, the steep defense budget cuts known as sequestration are projected to reduce spending by roughly $100 billion a year from fiscal 2012 through 2021.

The GAO’s tally accounted for erroneous payments across 124 programs under 22 federal agencies. However, just three programs — Medicare, Medicaid and the Earned Income Tax Credit — accounted for more than $80.9 billion of the total.

Auditors blamed these three programs for the uptick in improper payments overall. All three experienced an increased error rate from the year before. Across the government, the errors amounted to 4.5 percent of program outlays, up from 4 percent in fiscal 2013.

Together, Medicare and Medicaid paid out $77.4 billion in improper payments, a 20.4 percent increase over 2013. The programs combined represent about 62 percent of total improper payments government-wide.

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