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Sunday, October 04, 2015 2:49 PM

Fraudulent Medicare, Medicaid, EITC, Tax Refunds, etc. Total $1 Trillion Since 2003

A huge chunk of your tax dollars every year goes straight into the pockets of crooks. Nearly one in three earned income credits (EIC) is fraudulent. And the numbers keep getting bigger every year according to the Government Accountability Office.

Please consider GAO: Feds Made Nearly $1 Trillion in Overpayments Since Fiscal 2003.

Government waste took a significant turn for the worse in fiscal 2014, rising dramatically to $124.7 billion from $105.8 billion in fiscal 2013.

Since fiscal 2003, “cumulative improper payment estimates have totaled almost $1 trillion,” the Government Accountability Office (GAO) said in a new report.

U.S. Comptroller General Gene Dodaro testified Thursday on the GAO’s new findings (http://www.gao.gov/products/GAO-16-92T) before the Senate Finance Committee.

The GAO said three programs were most at fault: Medicare, Medicaid and the Earned Income Tax Credit (EITC).

The Earned Income Tax Credit program was the worst offender.

The Internal Revenue Service estimated that the program erroneously handed out $17.7 billion worth of “improper” payments. That amounts to a whopping 27.2 percent of the total $65.2 billion in EITC refund checks that the IRS sent out in fiscal 2014. 

Medicare was nearly as bad. The program, which covers about 54 million elderly and disabled beneficiaries, incorrectly doled out $59.9 billion in fiscal 2014, which is about a tenth of its $603 billion budget.

So, one out of every $10 that Medicare spent last year was erroneous, the GAO found.  Medicaid made $17.5 billion in mistaken payments out of its $304 billion budget, for a nearly 6 percent error rate.

Besides the EITC program, the federal programs with the highest reported error rates for fiscal 2014 included the School Breakfast program (25.6 percent) and the Farm Security and Rural Investment Act Programs (23.1 percent).
GAO Report

The GAO Report is called Addressing Improper Payments and the Tax Gap Would Improve the Government's Fiscal Position

Inquiring minds may wish to take a look.

Correct Term is Fraud

Writer Elizabeth MacDonald labeled this as "Overpayments" or "Waste".  The GAO labels this as "improper payments".

Let's be more accurate, it's theft of taxpayer money via fraud.

Moreover the GAO numbers are dramatically understated. Disability fraud, not part of  the GAO report, is rampant.

  1. States' Incentive to Promote Disability Fraud: States Have an Incentive to Promote (Not Stop) Disability Fraud; So How Much Fraud Is There?
  2. 14 Million on Disability: Unwilling to Work; 25% in Hale County AL Collect Disability, 14 Million Nationwide; A Simple Solution
  3. Why Work?: Why Work for $7.25 When Welfare Pays $15.00 in 12 States and $8.00 in 33 States? Is a Low Minimum Wage the Problem?
  4. Puerto Rico Fraud: Puerto Ricans Get U.S. Disability Benefits for Inability to Speak English; Disability Deal Explained
  5. Police and Fire Fraud: 102 Police and Firefighters Caught in Disability Scam
  6. Claims Hit Record: Disability Fraud Holds Down Unemployment Rate; Jobless Disability Claims Hit Record $200B in January

Clinton Ends Welfare "As We Know It"

Want to understand the huge spread in disability fraud? Look no further than Bill Clinton as explained in detail in link #1.

This all goes back to 1996 when president Clinton promised to "end welfare as we know it". Clinton did indeed do just that, and fraud is the result.


The federal government pays disability, but states pay part of welfare costs. This creates a huge incentive for states to actively promote disability fraud (simply to get people off state-sponsored welfare programs).

And that they have done. A primary example pertains to Hale County (see link #2).

25% of the people in Hale County Alabama collect disability. They are all tied to Hale county's Dr. Timberlake.

Dr. Timberlake asks a simple question to all his patients. "What grade did you finish?" If you claim "back pain" and do not have a degree, Timberlake believes you are disabled.

The GAO says "Old Age, Survivors, and Disability Insurance" claims are only 0.4% improper. Taking the above into consideration I would be shocked if the real percentage is under 33%. Indeed, 67% fraud is probably more like it.

And if so, what's the real dollar total?

Mike "Mish" Shedlock

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