The Social Security Administration (SSA) is facing challenges in curbing improper payments, as highlighted in a recent status report by the inspector general. Released on March 3, the 2024 report addresses the ongoing issue of improper payments, which amounted to nearly $71.8 billion from 2015 to 2022. Despite concerns, the report does not support claims of over $70 billion in Social Security fraud. The SSA has long grappled with these issues, as similar warnings have been issued for over a decade. The influx of the baby boom generation into retirement is exacerbating the situation, leading to fewer workers contributing to the system.
The Government Accountability Office (GAO) provided an estimate of $233 billion to $521 billion lost annually to fraud between 2018 and 2022. This figure includes official fraud findings from legal proceedings and estimates from individual agencies. However, the GAO acknowledged that these losses represent only 3% to 7% of average federal outlays. The report, filled with caveats, may not accurately represent other years due to increased pandemic spending. The Social Security Trustees Report for 2024 warns that by 2035, trust funds will be unable to pay 100% of benefits.
Improper Payments and Their Impact
Improper payments have been a persistent issue for the SSA. Between 2015 and 2022, approximately $71.8 billion was disbursed incorrectly. These payments include funds sent after beneficiaries' deaths, with a 2021 report revealing around $300 million was issued over two decades, though one-third was recovered.
The SSA's inspector general continues to make recommendations to address these issues. However, some proposals by the GAO remain unimplemented, with potential savings of $18.4 billion still unrealized. Despite disagreements with some GAO recommendations, the SSA acknowledges the need for improvement.
"Whatever the number, it is huge in absolute terms," said Westbrooks.
The financial implications are significant and highlight the need for stringent measures.
Estimating Fraud Losses
The GAO's estimation of fraud losses is substantial, ranging from $233 billion to $521 billion annually from 2018 to 2022. These figures factor in both confirmed fraud cases and agency estimates. However, experts advise caution when interpreting these numbers.
"It's a fine report to try to put numbers to an amorphous issue, but you can't take the high-end numbers as a definitive statement on the dollar amount of fraud that exists in federal spending," stated Joshua Sewell.
The distinction between fraud and waste is crucial. Fraud involves criminal activity, while waste refers to inefficient or careless use of resources.
"Fraud and waste mean different things. Waste refers to careless use, and fraud includes criminal wrongdoing," explained Musk.
Efforts to tackle these issues are essential for preserving critical programs.
"In fact, only by tackling waste or fraud can we actually preserve those programmes for the future," added Musk.
Challenges Ahead
The SSA faces several challenges as it confronts these financial irregularities. A significant factor is the demographic shift caused by the baby boom generation entering retirement. This transition results in fewer contributors to the Social Security system, increasing financial pressure on the trust funds.
The 2024 Social Security Trustees Report warns that by 2035, trust funds may not cover 100% of benefits. This projection underscores the urgency of addressing improper payments and fraud to ensure program sustainability.
The complexity of federal spending and entitlement programs complicates efforts to identify and eliminate wasteful practices.
"Most of the federal spending is entitlements. So that's like the big one to eliminate. That's the sort of half-trillion, maybe $600, $700bn a year," noted Musk.
