Just five government programs were responsible for most of these payments.
The Government Accountability Office’s report on improper payments by the federal government, released on Tuesday, showed $236 billion worth of errors made by federal agencies last year. Improper payments are defined as “those that should not have been made or were made in the incorrect amount.” The GAO’s findings are an underestimate since not all federal agencies provided information on improper payments.
Improper payments have increased over time. In 2003 there were $35 billion in improper payments. The number first broke $100 billion in 2009. It increased each year from 2017 to 2021, rising from $141 billion to the peak of $281 billion. It has declined in the past two years but remains much higher than it was before the Covid pandemic.
The GAO classifies improper payments into four categories: overpayments, underpayments, technically improper payments, and unknown payments. If errors were random, we would expect to see roughly the same amount of overpayments as underpayments. But 74 percent of improper payments last year were overpayments, the GAO found. Only 5 percent were underpayments. Nineteen percent were unknown, and 2 percent were technical.
Four-fifths of the improper payments in 2023 came from just five government programs: Medicare, Medicaid, expanded federal unemployment insurance, the earned-income tax credit, and the Paycheck Protection Program. Last year, the GAO found that about one-seventh of expanded federal unemployment insurance given between April 2020 and May 2023 was fraudulent. Also last year, the Department of Labor inspector general found that 22 percent of pandemic-era federal unemployment payments were improper.
Sixteen federal programs reported improper-payment rates of 10 percent or higher. The Paycheck Protection Program was highest, with two components of that program reporting improper-payment rates of 49.1 percent and 40.5 percent. Next came the disaster-assistance program from the Farm Service Agency at 40.4 percent, and 33.5 percent of payments related to the earned-income tax credit were improper. Programs of the Department of Veterans Affairs, the Department of Health and Human Services, and the Corporation for National and Community Service are also included in the 16 programs.
The GAO found eight success stories of programs that decreased improper payments, but four of those were programs that had expired or were terminated. The other four — Medicaid and three programs within the Department of Education — decreased improper payments because they implemented better program controls.
To put $236 billion in perspective, the budget of the Department of Justice in 2023 was $37 billion. The budget of the Department of State was $58 billion. The federal government made improper payments multiple times greater than the entire budgets of the cabinet departments tasked with law enforcement and diplomacy last year.