Policy Memo
Topline
States—not federal taxpayers—should have to pay when they issue improper payments and enable fraud.
Affordability 101 · Chapter 10: Accountability and Oversight
Plymouth Institute for Free Enterprise
States—not federal taxpayers—should have to pay when they issue improper payments and enable fraud.
Federally funded and state-administered welfare programs are the epitome of unaccountable and inefficient spending. The federal government opens the spigots of taxpayers’ money to states, and states task unelected and job-protected bureaucrats with doling out the money with virtually no consequences for a woeful lack of integrity, efficiency, or accountability. Not surprisingly, states and other welfare benefit providers have little incentive to even make sure the payments they send go to people who are eligible to receive them, or that they issue the correct amount. Last year, the federal government reported $97 billion of improper payments in government health insurance programs alone (the true amount is likely much higher). That’s enough to provide health insurance to 3.6 million families or 10.4 million individuals. In food assistance programs, the government reported $12.5 billion in improper payments—enough to cover annual grocery costs for 1.6 million households.
Households that receive no welfare benefits are finding it harder to afford things like health care, groceries, and housing. They should not also have to pay for waste, fraud, and abuse in federal welfare programs. H.R. 1’s SNAP cost-sharing reforms represent a remarkable improvement in protecting taxpayers’ dollars by better aligning incentives. Beginning in 2028, states with improper SNAP payment rates of 6% or more will be responsible for a portion of benefit costs, up to 15%. Policymakers should apply similar cost-sharing standards based on improper payments to other federal transfer programs. Those who spend taxpayer dollars should share responsibility for protecting them.
No federal funding should be unconditional. Unless states and welfare administrators face consequences for recklessly wasting federal funds, they will have no incentive to protect the integrity of taxpayers’ dollars.
This memo is part of Affordability 101, Advancing American Freedom’s playbook of 101 policy solutions to make life more affordable.