Will Washington Ever Get Serious About Fighting Rampant Government Insurance Fraud?

Another week, another story involving potentially billions of taxpayer dollars being wasted in Washington.

A few days ago, The New York Times profiled a significant increase in catheter-related fraud in the Medicare program. This time, Politico documented longer-running problems regarding health insurance coverage for federal workers.

In both cases, outrage about the fraud seems to far outrun efforts by federal officials to do anything to stop it. With such lax fiscal controls, is it any wonder that Washington has run up $34 trillion in debt and counting?

Not Removing Ineligible Participants

The Politico story highlighted work by auditors at the Government Accountability Office (GAO) regarding the Federal Employee Health Benefits Program (FEHBP). Specifically, GAO noted that the federal government does not review FEHBP participants’ eligibility.

By not reviewing eligibility, federal employees could add dependents to their family coverage who do not meet statutory criteria, allowing individuals to receive taxpayer-subsidized health coverage via fraudulent means. The GAO report cites several examples where this type of fraud occurred, including one individual who kept an ex-spouse on subsidized FEHBP coverage for over a decade.

Despite these incidents of fraud, the Office of Personnel Management, which administers the FEHBP, has failed to conduct a comprehensive audit examining all dependents’ eligibility. Its stated reason for not doing so amounts to bureaucratic buck-passing. Because each federal agency (e.g., Treasury Department, Labor Department, etc.) enrolls and funds the benefits for its workers, OPM worries that the costs of an eligibility audit will fall solely on its shoulders — but the savings from ineligible individuals being removed from the rolls will go to the respective agencies.

By OPM’s own estimates, an audit could save taxpayers anywhere from $360 million to $1 billion per year. Yet in typical Washington fashion, OPM is too focused on the cost of conducting the eligibility audit, rather than the billions of dollars they could save by acting to fight fraud.

Fraud on Auto-Pilot

In some respects, the timing of the Politico piece seemed curious, because this fraud has persisted for years with little notice from the press or the public. GAO released its report on eligibility fraud in FEHBP over a year ago, in December 2022. And as GAO notes, OPM’s own inspector general had released its analysis of the situation years before the December 2022 study. As that audit notes, FEHBP has lacked any mechanism to verify dependents’ eligibility since the program began in 1960.

You read that right. For over six decades, federal employees could add a bogus spouse, child, or other dependent to their health coverage, and the authorities had little chance of discovering said fraud.

In fairness, as a former federal employee myself and a longtime health policy analyst, I had little knowledge or understanding of the potential for fraud within FEHBP until the Politico story on the issue first ran. And in many respects, that’s the problem. The possibility of waste and abuse is so embedded within government that “clean” programs with strict fraud controls represent the exception rather than the rule.

Stop the Scams

At this point, it is worth repeating that fighting fraud alone will not solve the federal government’s structural imbalances. We have spent so far beyond our means, and for so long, that it will require tough choices to restore fiscal sanity and balance.

But getting rid of the blasé attitude toward fraud in Washington represents a good place to start when it comes to getting our budgetary house in order. It’s entirely unreasonable to ask the general public to bear economic pain, whether that pain comes in the form of tax increases, adjustments to programs like Social Security and Medicare, or other tough measures, while fraudsters continue to run free because federal officials can’t or won’t do everything in their power to stop the scams.

President Biden, like other leftist politicians, loves to talk about forcing the wealthy to “pay their fair share.” But as long as fraud loopholes like those in FEHBP exist, all honest Americans — rich and poor alike — are paying more than their fair share, because their hard-earned dollars are getting diverted to crooks and scammers. Biden and his administration should act accordingly.