How often are you asked to confirm your identity daily? With authenticator apps, six-digit codes, password resets, and social security numbers, these verifications pile up. Despite the need for identity confirmation in daily life, the same scrutiny isn’t applied to government welfare spending, which amounts to trillions of dollars.
Congress, federal agencies, and states should immediately demand identity verification for all welfare applicants. This approach is a straightforward method to prevent fraud and could save taxpayers nearly $30 billion over the next decade. Fraud prevention in welfare is overdue, and Americans can no longer rely on the honor system to combat fraud.
During the COVID pandemic, fraudsters stole approximately $400 billion from government spending. Reports indicate at least 10 cents of every food stamp dollar falls to waste and fraud, and more than 20 cents of each Medicaid dollar is misused. Medicaid fraud alone might exceed $2 trillion in taxpayer costs over ten years.
Currently, federal regulations don’t require states to verify Medicaid applicants’ identities, except in specific situations involving citizenship. The Trump administration addressed this by implementing measures against fraud, including criminal crackdowns and forming a task force. Fraud-friendly states like Minnesota and California faced funding repercussions.
Conversely, during the Biden administration, states were encouraged to accept self-attestation for eligibility and base decisions on trust, with verifications occurring post-benefits distribution. This leniency benefited scammers but negatively impacted taxpayers and those truly in need.
In Illinois, fraudulent Medicaid claims for nonexistent alcohol and drug treatment services amounted to $75 million. These false claims funded luxury cars, real estate, diamonds, and a yacht named “Butt Nekkid” docked in Chicago. Another scheme involved $67 million in fake behavioral health services claims, financing luxury cars, jewelry, and brokerage deposits.
A fraud scheme in New York charged Medicaid $35 million for non-existent ambulatory services, funding multiple real estate purchases. Though these cases were prosecuted by the Trump administration’s Department of Justice, they reached tens of millions in fraud first, all of which was preventable.
Recent audits reveal the ease of accessing taxpayer money by scammers. The USDA’s analysis of food stamp data from 29 states found many duplicate and ineligible recipients. Nearly 250,000 individuals received duplicate benefits within the same state, and over 100,000 received benefits in multiple states. Social Security checks revealed 185,000 deceased recipients and more than 440,000 beneficiaries using fictitious numbers, like 111-11-1111, amounting to nearly a billion dollars in benefits.
The Government Accountability Office stress tested the ObamaCare health insurance marketplace using 20 fictitious applications. Nineteen were approved for subsidized coverage, with 18 still covered when the report was published. It also noted around 70,000 Social Security numbers used fraudulently to secure substantial tax credits annually.
Identity theft affects one in five Americans. The solution is not allowing fraud to persist until discovery or presuming innocence until scammers are caught. In all other aspects of life, identity verification is routine. Yet, welfare programs operate under outdated systems. Taxpayers regularly verify their identities; applying the same standard to welfare applicants protects public funds.
Michael Greibrok is a senior research fellow at the Foundation for Government Accountability.
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