$98 Billion: Embarrassing Wasteful Spending for White House

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Health care spending isn't just the main driver of our debt. It's also the main driver of our waste. The federal government made $98 billion in improper payments in 2009, about 5 percent of total spending. Improper payments are funds that "go to the wrong recipient, the recipient receives the incorrect amount of funds, or the recipient uses the funds in an improper manner," according to the White House. And more than half of the waste -- $54.2 billion -- came from Medicare and Medicaid.*

How did this happen?


The White House is mounting a two-pronged defense. First, they argue that when you spend more money, you're likely to waste more money. I suppose that's true, but improper payments raced increased by 40 percent over 2008, and federal spending increased by only 18 percent. Second, just as the Obama administration has claimed that its high deficit figures are, in small part, the result of more honest accounting, they claim that stricter, more honest standards for improper payments are making the jump look more dramatic.

That could be true, but this is still rotten news for the administration and it's no wonder they released this information during a 6:45 p.m. conference call while half the district's journalists were at happy hour. Half of the intended savings under health care reform come from eliminating waste and fraud in Medicare. The waste is certainly there! But the administration's will and ability to do something about it will come under increased scrutiny with today's report. 

*Here are some additional stats. The Improper payment rate in Medicare Advantage climbed to 15.4 percent. A fifth of the $12.3 billion in improper payments for jobless insurance were the result of fraud.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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