The Number Nobody Wants to Talk About
The federal government disbursed approximately $175 billion in improper payments in fiscal year 2023. That's the government's own number, from its own audits. Improper payments — meaning payments made to ineligible recipients, in incorrect amounts, or for services not rendered — across programs like Medicaid, SNAP, the Earned Income Tax Credit, and unemployment insurance.
$175 billion. That's more than the entire GDP of Ukraine before the war started.
And that's just what they caught.
The political class treats this as a rounding error. Both parties, to varying degrees, have decided that the optics of cracking down on welfare fraud are worse than the cost of tolerating it. Meanwhile, states that actually administer many of these programs are figuring out on their own what basic fiscal responsibility looks like.
What States Are Actually Doing
Georgia implemented a cross-agency data matching program that compares Medicaid enrollment rolls against death records, incarceration databases, and income reporting from the IRS. The result: over 200,000 ineligible recipients removed from the rolls in 2023, saving an estimated $400 million in that year alone. Arkansas ran a similar audit of its SNAP rolls and discovered recipients enrolled under multiple identities — a fraud vector that had been operating for years because no one had bothered to look.
Idaho cross-referenced its unemployment insurance payments against active payroll records and found a non-trivial percentage of recipients collecting benefits while working full time. That particular fraud exploded during the COVID-19 pandemic, when the federal government sent money out so fast that verification was treated as an obstacle rather than a requirement.
These aren't complex interventions. They're data matches. They require a computer, a few database licenses, and the political will to tell ineligible recipients that the checks are stopping. The technology exists. The will is what's been missing.
Why Washington Won't Lead
The answer to that question isn't complicated, even if it's uncomfortable to say plainly. There are constituencies that benefit from porous welfare administration. Some of them are recipients who shouldn't be receiving benefits. Some of them are advocacy organizations whose funding and influence depends on maximizing enrollment numbers regardless of eligibility. Some of them are politicians whose districts include those organizations and recipients.
The federal bureaucracy that administers these programs has no structural incentive to reduce rolls. Agency budgets are often tied to program size. A Medicaid office that eliminates 100,000 ineligible recipients doesn't get rewarded — it gets a smaller budget request.
I've talked to county-level welfare administrators in three different states. Every single one of them described a federal compliance framework that creates more paperwork for legitimate recipients than it does barriers for fraudulent ones. The system optimizes for enrollment, not accuracy.
States that are reforming welfare administration are doing it in spite of federal guidance, not because of it. Georgia had to fight CMS — the federal agency that oversees Medicaid — to implement its data matching program. The feds objected on procedural grounds. Georgia did it anyway and saved hundreds of millions of dollars.
That's not a story about state incompetence. That's a story about federal bureaucracy protecting its own dysfunctions. The states aren't waiting for permission anymore. Good.
