GAO says fraud risk high in $1.1T of state-run federal programs

Twenty federal programs that route nearly $1.1 trillion through state governments – including Medicaid, SNAP and disaster relief – are vulnerable to fraud because of how the money is distributed, the Government Accountability Office reports.

The money rarely goes straight from Washington to a recipient. It passes through states, then often to subrecipients, contractors and subcontractors. Every layer, GAO found, adds another entry point for fraud while making oversight harder to enforce.

The report is the first in a planned GAO series examining fraud in state-administered programs. It reaffirms the agency’s estimate that the government loses between $233 billion and $521 billion a year to fraud, or about 3% to 7% of average federal obligations. GAO warns the range reflects government-wide risk and shouldn’t be pinned to any single program.

Federal audits from 2020 to 2024 turned up “severe and persistent findings” in 18 of the 20 programs, an indication, GAO said, that many lack the contro...