Better Income Estimation for the Public Sector

Today, entitlement spending is the highest in United States history – and it shows no sign of slowing down. Since 1960, entitlement spending by federal agencies has increased by an explosive 9.5 percent per year for 50 straight years. Almost 100 times higher than it was in 1960, entitlement transfer payments for individuals totaled $2.2 trillion in 2010 alone, covering aspects like income, healthcare, age and unemployment.

Entitlement programs help millions of truly in need people and communities in America. But what happens when that spending is being fraudulently claimed?

These fraudulent claims happen more than might be realized. In the United States, agencies continue to aggressively battle improper payments in their entitlement programs. While error rates are generally getting better, improper payments are still a multibillion-dollar problem. There are still over $100 billion in improper payments annually, and the programs are costly to administer. Additionally, according to a U.S. Government Accountability Office report, in fiscal year 2014, the estimated amount of government-wide improper payments increased by nearly 20 percent – $19 billion – over the previous year, the largest increase seen in recent years.

The public sector has long tried to solve these complicated problems of fraud and improper payments using income verification tools and better eligibility testing. Simply put, many eligibility programs require administrators to verify if the applicant and their household meet the income thresholds set for the program.

But to verify an applicant’s information is an incredibly difficult and manual process. Accurate income data is cumbersome to locate and identify, and administrators are under great pressure to work through the backlog of applicants. For this reason, proper eligibility verification often takes too much time or is not done well, if it is done at all. With many entitlement programs driven by income thresholds, and income data being so hard to obtain and verify properly, improvement is clearly needed.

But there is a way forward. Income estimation, using technology, data, analytics, and other tactics, is a solution for the public sector. Income estimation tools can fill gaps where they exist when eligibility decisions are based on income level. When income estimation is done properly and accurately for these entitlement programs, time is saved, costs are saved, and eligible citizens can get the support they need.

That is why GovLoop has partnered with TransUnion, a global information solutions provider that offers income estimation technology, for this Industry Perspective. In this resource, we focus on income data and how it affects the public sector’s ability to administer means-tested programs; explain why income data is difficult to assess but critical to do properly; showcase solutions to verify demographic data and prevent fraud; and discuss other unique tools to help battle program errors and fraud.