Government Fraud Continues in LIHEAP

Pennsylvania is rather familiar with welfare fraud, and apparently, we haven’t learned our lesson yet. The latest example of welfare fraud stems from the Low Income Home Energy Assistance Program (LIHEAP), discovered after the Auditor General conducted a special audit of the program.

The LIHEAP audit found rampant fraud among a multitude of applications. In Philadelphia County alone nearly 1,000 applicants were flagged as having potential patterns of abuse. Several problems discovered among applications were:

• Applicants using SSNs that are invalid or associated with deceased individuals
• Applicants filing multiple applications using different SSNs
• Applicants underreporting income on their LIHEAP applications
• Applicants receiving excessive benefits
• Applicants receiving benefits for water/sewer bills

These findings prompted the Government Accountability Office (GAO) to investigate seven other states, which also found deceased individuals, prison inmates, and even owners of multi-million dollar homes receiving LIHEAP benefits. Of all households surveyed, 9% of applications contained invalid identity information. The benefits these households received totaled $116 million – and that was only in 7 states. Untold millions could be wasted in fraud and abuse in the other 43 states that were not surveyed.

How is this possible? The GAO determined the cause was an anemic fraud prevention system:

The selected states do not have an effective design for a comprehensive fraud prevention framework. In fact, the states lack key efforts in all three crucial elements of a well-designed fraud prevention system: preventive controls, detection and monitoring, and investigations and prosecutions. …Finally, several state officials stated that they generally did not pursue investigations and prosecutions. The reason is that the benefit amounts are relatively small.

These “relatively small” amounts do add up. But the fact remains; the government has little incentive to be responsible with its philanthropy when it’s the taxpayers’ money they are spending. Yes, more oversight will help, but it will never completely eliminate fraud. Consequently, this fact begs the question “Should the government be spending our money in this manner?”

And so I leave you with the words of the classical liberal theorist Frédéric Bastiat to contemplate:

Here I encounter the most popular fallacy of our times. It is not considered sufficient that the law should be just; it must be philanthropic. Nor is it sufficient that the law should guarantee to every citizen the free and inoffensive use of his faculties for physical, intellectual, and moral self-improvement. Instead, it is demanded that the law should directly extend welfare, education, and morality throughout the nation…These two uses of the law are in direct contradiction to each other…A citizen cannot at the same time be free and not free.