With annual federal budget deficits approaching $2 trillion, policymakers are examining ways to reduce improper payments in state-administered programs like Medicaid, SNAP and Unemployment Insurance.

The issue gained renewed attention after reports emerged in December about a conspiracy to steal billions of dollars in benefit payments in Minnesota. The case highlighted vulnerabilities in how states verify that recipients remain eligible for federal benefits.

According to policy analysts, three federal databases exist to help states prevent improper payments, but each has significant limitations that allow fraudsters to exploit gaps between states.

What the Left Is Saying

Progressive advocates and some Democratic lawmakers say improving benefit integrity is important, but warn against policies that could inadvertently deny assistance to eligible Americans. They emphasize that improper payments represent a small fraction of total program spending and note that overly aggressive verification can create barriers for vulnerable populations.

Progressive policy organizations have noted that the vast majority of federal benefits go to legitimate recipients, and that strict verification requirements can impose administrative burdens on states and create delays for people who need assistance urgently. Some advocates have also raised concerns about data accuracy, noting that errors in federal databases can result in eligible beneficiaries being wrongly denied benefits.

Additionally, progressive critics argue that any expansion of data-sharing between states should include robust privacy protections to ensure sensitive personal information is not misused. They emphasize that program integrity measures should be balanced with ensuring access for those who qualify.

What the Right Is Saying

Conservative analysts and Republican lawmakers argue that improper federal payments represent wasteful spending that undermines public support for vital assistance programs. They say mandatory use of existing federal databases would significantly reduce fraud without harming eligible recipients.

Conservative policy groups have advocated for real-time verification requirements, arguing that the current "pay and chase" model—attempting to recover payments after they are made—is inefficient and rarely successful. They point to the Death Master File gaps and inconsistent state use of federal databases as evidence of systemic failure to prevent waste.

Fiscal conservatives also argue that making benefit integrity requirements mandatory rather than voluntary would create uniformity across states, eliminating the geographic disparities that fraud rings exploit. They note that taxpayers expect their contributions to help those in genuine need, not to fund fraudulent claims.

What the Numbers Show

The Social Security Administration's Death Master File, a basic tool for preventing payments to deceased individuals, had nearly 900,000 valid death records missing in 2024, according to audits. Many states do not run their Medicaid or SNAP rolls against the file with sufficient frequency to catch payments to deceased recipients.

The National Directory of New Hires tracks employment and wage data in near real-time. While federal law now requires SNAP agencies to check this database, many states treat it as a secondary check rather than a primary filter. Without mandatory real-time integration, recipients can collect Unemployment Insurance or TANF for months after securing employment.

The Public Assistance Reporting Information System is the only tool designed to catch individuals receiving benefits in multiple states simultaneously. Because participation is voluntary, fraudsters can exploit states with weaker data-sharing practices.

The Centers for Medicare and Medicaid Services reported approximately $31 billion in improper payments for Medicare Fee-for-Service in fiscal year 2024, while SNAP improper payment rates have historically ranged from 3% to 10% depending on the verification methods used.

The Bottom Line

The debate over benefit integrity centers on how to balance fraud prevention with program access. Policy experts across the political spectrum agree that existing federal databases are underutilized, but they differ on whether mandatory requirements or enhanced voluntary tools are the better approach.

Congress could consider legislation to mandate state use of federal verification databases, fund real-time updates to improve data currency, and potentially convert PARIS from a voluntary to mandatory system. Any such changes would require addressing both technical infrastructure gaps and concerns about privacy protections.

The Minnesota case and ongoing budget deficits have intensified interest in this area. Watch for potential legislative proposals in the coming months that could reshape how states verify eligibility for federal benefit programs.

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