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A Lack of Control

Friday July 11th, 2014   •   Posted by Craig Eyermann at 8:54am PDT   •  

The Associated Press reports that for the fifth year in a row, the amount of checks that the U.S. federal government has acknowledged that it has improperly paid out has exceeded $100 billion:

WASHINGTON (AP) — By its own estimate, the government made about $100 billion in payments last year to people who may not have been entitled to receive them — tax credits to families that didn’t qualify, unemployment benefits to people who had jobs and medical payments for treatments that might not have been necessary.

Congressional investigators say the figure could be even higher.

The following chart shows where the federal government recognizes that it has improperly spent billions of dollars:


Digging into the data behind the observed massive increase in improper payments since 2007, we find that payments for Medicare and especially for Medicaid account for the sustained increase. For Medicare, that coincides with the period in which the Baby Boom generation began reaching Age 65, the age at which these Americans could begin receiving Medicare benefits.

Medicaid is a very different story, since these payments began increasing in 2008 as the federal government bailed out many state governments that were unable to contribute their portion of payments to these programs during the worst years of the recession. Those figures have remained elevated because the Patient Protection and Affordable Care Act, more popularly known as “Obamacare,” sought to greatly expand eligibility for the Medicaid program.

In both cases, however, the improper payments that the federal government has made are due to the absence of adequate controls over its spending. That the amount of improper payments has exceeded $100 billion for the fifth year in a row suggests that bringing this excessive spending under control is not currently a meaningful priority for the federal government’s bureaucrats.

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July 2014