What is worse than being afraid of what a big, faceless bureaucracy will do with its electronic records of who you are (see: Government Won’t Guard Your Private Identity)? It’s finding out that your fears were entirely justified. Not only is your information at risk, you are paying for what happens when crooks use federal data to make money.
Electronic records help out crooks
Despite what we like to believe, electronic records stored in federal data systems don’t really show who you are. They only show what those records think you are or worse, what the data wants you to be. You might be stored as anything from a corpse to a terrorist and not even know it. That’s a problem.
With international crises stealing the thunder from waste and fraud, how government handles electronic records is not high on the issues list this fall. It should be, especially in races with Democratic candidates who sold the country on the advantages of Obamacare’s electronic heath records.
Are quick tax refunds worth billions in IRS fraud?
What would taxpayers do without the GAO? The agency is one of the few arguments against Washington being utterly lacking in value. The agency’s recent report on IRS fraud may not be as entertaining as listening to our national tax collector backpedaling over Lois Lerner, but with over $5 billion in tax return fraud1 and untold amounts we haven’t uncovered, it should raise a few eyebrows.
The IRS is a big agency. Managing the volume of electronic data stored in its systems is a daunting task. Does that make it a good idea to rush out fraudulent refund checks because the information to verify W2s is not available until later in the year?2 After all, the IRS is part of our government. No one expects things to happen quickly. If Uncle Sam paid a little interest on those refunds, we could forgive a delay.
Need federal benefits? Does who you are matter?
If you are a crook and you want subsidized health benefits, you are in luck. One of Obamacare’s features is the expanded opportunity to steal. Taxpayers will shell out an estimated $36 billion for health insurance subsidies this year.3 When the GAO went shopping with 18 made up identities the agency found that fraud did not hamper obtaining coverage that taxpayers help to fund. Out of 18 phony applications:
As of July 2014, GAO continues to receive subsidized coverage for the 11 applications, including 3 applications where GAO did not provide any requested supporting documents.4
A new report also revealed weaknesses in protecting electronic records that the Centers for Medicare & Medicaid Services swap between different systems. The GAO found that:
Until these weaknesses are addressed, the systems and the information they contain remain at increased risk of unauthorized use, disclosure, modification, or loss.5
Unauthorized use of those private, secure, electronic records the Federal Government takes care of is a problem while you are alive. How about after your death? Who collects your benefits?
Operation Walking Dead: how to collect benefits after you die
Raising the question of whether the walking dead are the crooks or those managing federal entitlement programs, Operation Walking Dead led to 18 cases being prosecuted for $1 million in Social Security benefits. A Social Security Administration Inspector General’s report detailed offenses going back to 2000, all committed against the accounts of dead people.6
$1 million is not very impressive compared to the over $12 million in Medicaid benefits paid out to deceased recipients in Illinois, but it helps show how the problems with government overseeing your electronic records continues even after your demise. Citing $500,000 in benefits paid over a 37 year period to the relative of a dead retiree,7 the GAO looked into Social Security data errors and found that:
… analysis of a sample of death records SSA erroneously included in its death data found that these errors may not have occurred if SSA had verified them. In other cases, when data provided do not match SSA’s records, SSA typically does not record these deaths.8
The problems verifying identities for Americans and worse, non-Americans are monumental, but who would have thought being dead presents a spending problem for government? Would it be easier if we simply fingerprinted everyone at birth and mailed a finger to Uncle Sam after the funeral?
Good and bad news about electronic records and fraud
Two things are certain. First, the good news. For the paranoid and conspiracy minded it’s up for grabs whether the government can prove who you are, or even whether you are alive. The bad news? Federal data can’t prove who you aren’t, either. That’s good for crooks, but not so good for the rest of us. The system is still working for the bad guys. That includes lawmakers in Congress who pass laws like the Affordable Care Act and demand we keep tweaking the tax code knowing the government is far too unwieldy, inefficient, and behind the times to protect the information we give up.
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