The past year-plus has seen a focus on fighting fraud within government programs seemingly unprecedented in recent history. Yet, like the mythical Sisyphus pushing his rock uphill or the many-headed ancient Hydra, each success is seemingly matched by yet another scandalous source of government corruption.
Multiple reports in recent weeks show how reformers have their work cut out for them. On the federal level, improper payments continued to grow (although the most recent fiscal year examined included the final months of the Biden administration). Meanwhile, state Medicaid programs have not fully complied with a federal requirement designed to guard against program scams. It’s enough to make one wonder when the public sector will finally come to grips with the scale of the problem.
Rising Improper Payments
Late in April, the Government Accountability Office (GAO) released its annual compilation of agencies’ improper payment estimates. The GAO report found that those payments increased by more than $24 billion in fiscal year 2025 (which went from Oct. 1, 2024, through Sept. 30, 2025), to $185.8 billion.
Improper payments do not necessarily equate to fraud. In addition to outright fraud and embezzlement, improper payments also include payments made in the incorrect amount or without appropriate documentation. To borrow a religious phrase relating to sin, think of improper payments as a “near occasion” of fraud — i.e., the lack of attention to detail that allows fraud to fester and grow.
And even though improper payments increased in fiscal year 2025, the higher number still understates the scope of the problem. For one, Medicaid improper payments — many of which are linked to ineligible individuals receiving coverage — will increase in the coming years, as eligibility checks suspended during the Covid pandemic gradually get reincorporated into states’ Medicaid estimates. Moreover, programs such as Temporary Assistance for Needy Families (originally called welfare) do not even estimate improper payment levels and amounts.
Many prominent programs have unacceptably high rates of improper payments. For instance, the Earned Income Tax Credit had a 32.7 percent improper payment rate in 2025, and the Refundable Premium Assistance Tax Credit (aka, insurance subsidies on the Obamacare Exchanges) had a 31.6 percent improper payment rate. The latter number, coming on top of numerous reports of Exchange fraud, provides yet more support for Congress’s correct decision to let the Biden-era enhanced subsidies expire as scheduled last December.
Yet despite nearly $200 billion (at least) in improper payments, GAO also reported that in 2024, 12 of 24 agencies had not complied with all the relevant criteria under the Payment Integrity Information Act. For instance, four agencies’ inspectors general noted that their agency did not develop a plan to meet a target for reducing improper payments, and eight agencies did not publish improper payment estimates at all.
The failure of many agencies to meet statutory requirements regarding information reporting shows a lack of attention to and interest in the problem. After all, as the saying goes, you can’t manage what you don’t measure. The dozens of inspector general recommendations not yet implemented likewise provide a clear explanation for the increase in improper payments GAO reported. Individually and collectively, these data points illustrate the scope of the problem the Trump administration must act to remedy throughout the federal government.
States Not Acting
Meanwhile, a recent Wall Street Journal editorial finds the situation little better in the states, many of which have also not complied with anti-fraud requirements. Specifically, Section 6401 of Obamacare required state Medicaid programs to validate providers every five years, checking their license status and address and verifying that the medical entities are not on a list of providers excluded from government programs due to fraud, negligence, or patient abuse.
The Foundation for Government Accountability (FGA) made Freedom of Information Act requests of state Medicaid programs about the status of their required checks. As the Journal noted in its editorial, the information received by FGA to date was far from encouraging:
Some 58,306 of Illinois’ (26%) providers haven’t been revalidated in five years. One Illinois provider hadn’t been reviewed in more than nine years. Georgia has revalidated only 11.4% of its providers in the last year, so it’s unlikely to meet the five-year mandate. Ditto Michigan, which has reviewed 26,308 [10.2%] of its 257,722 providers in the last year.
The Journal notes (as I have in these pages) one obvious reason for the lax performance: “[S]tates have little incentive to police fraud … because they get more federal funds the more they spend.” Of course, that rationalization would prove little comfort to any patients subjected to substandard care because a state Medicaid program failed to comply with a statutory mandate.
Just as important: preserving the efficient use of public funds. Particularly with families suffering from the effects of inflation, governments at all levels should view the dollars taxpayers contribute to government coffers as a scarce, precious resource that all public servants treasure and spend wisely. If individuals in those governments can’t or won’t abide by that principle, then they shouldn’t let the door hit themselves on the way out.
