By THE ALASKA STORY
July 25, 2026 – Twenty major federal programs administered through states, including Medicaid, food stamps and disaster assistance, are vulnerable to fraud because billions of dollars pass through multiple layers of government, contractors and other organizations before reaching their intended recipients, according to a new report from the Government Accountability Office.
The programs accounted for approximately $1.1 trillion in federal obligations during fiscal year 2025. They represented nearly 90% of the federal money obligated through state and other government-administered programs exceeding $100 million, the GAO reported.
Instead of flowing directly from Washington to an individual or service provider, much of the money first goes to states and then may pass to local governments, tribes, subrecipients, contractors and subcontractors.
Every additional layer can create another opportunity for false claims, stolen identities, bid-rigging, embezzlement or misuse of taxpayer money. It can also make federal oversight more difficult.
“Reliance on nonfederal agencies to distribute payments, make eligibility decisions, and conduct oversight can heighten fraud risks,” the report said.
Alaska was not singled out in the report, but the state provides a prominent example of the weaknesses that can develop when a large federal benefit program is administered at the state level.
Alaska recorded the nation’s highest Supplemental Nutrition Assistance Program payment error rate for the fourth consecutive year in fiscal year 2025. Approximately 23% of SNAP benefits issued in the state were paid incorrectly, compared with a national rate of about 11%.
That does not mean 23% of Alaska’s benefits were stolen or obtained through fraud. SNAP error rates include both overpayments and underpayments caused by incorrect eligibility decisions, inaccurate benefit calculations, missing information and administrative mistakes. In Alaska, most of the erroneous payments were overpayments.
Still, high improper-payment rates are considered a warning sign because weak administrative controls may also make fraud harder to prevent or detect.
Alaska’s latest rate represents an improvement from approximately 25% in 2024 and more than 55% in both 2022 and 2023. But the state remains an extreme national outlier after years of processing delays, staffing problems and administrative failures within the Division of Public Assistance.
The state previously faced a federal assessment of approximately $12 million connected to its high SNAP overpayment rate.
Alaska’s record also played a role in an unusual provision inserted into the 2025 One Big Beautiful Bill Act during negotiations involving Sen. Lisa Murkowski.
The law generally requires states with SNAP payment error rates above 6% to begin paying part of their benefit costs. The state share rises with the error rate and can reach 15% for states exceeding a 10% error rate.
But states with error rates of at least 13.34% received additional time before the cost-sharing requirements take effect. Alaska qualified for the delay, along with several other high-error jurisdictions.
The provision gave Alaska more time to repair its troubled system before state taxpayers could become responsible for a share of SNAP benefit costs. Critics called it an “Alaska carveout” and argued that delaying the financial consequences weakened the incentive for poorly performing states to fix their programs quickly.
The GAO report found broader weaknesses across the federal system. Of the 20 programs examined, only five supplied documentation showing they had identified and ranked their fraud risks in a manner consistent with leading practices. Five had no fraud-risk assessment, while the remaining programs provided incomplete documentation.
Federal and state audits conducted from 2020 through 2024 uncovered what GAO described as “severe and persistent findings” in 18 of the 20 programs. Such findings can involve material weaknesses, repeated compliance problems or deficiencies left unresolved for years.
In fiscal year 2025 alone, federal officials estimated that Medicaid made $37.4 billion in improper payments, representing 6.1% of the program’s spending. SNAP recorded an estimated $10.2 billion in improper payments, or 10.9%.
Improper payments and fraud are not interchangeable. An improper payment may result from paperwork errors or insufficient documentation, while fraud requires intentional deception. GAO nevertheless said high improper-payment rates can expose weak controls and indicate that a program is vulnerable to fraudulent schemes.
GAO reaffirmed its earlier estimate that the federal government loses between $233 billion and $521 billion annually to fraud—approximately 3% to 7% of average government-wide obligations, based on fiscal years 2018 through 2022.
The agency cautioned that those percentages apply to the federal government as a whole and should not be used to estimate fraud within SNAP, Medicaid or any other individual program.
GAO has issued at least 50 recommendations intended to strengthen fraud prevention in the 20 programs. Federal agencies have implemented 28, while 22 involving the Environmental Protection Agency and the departments of Energy, Health and Human Services, and Housing and Urban Development remain open.
House Oversight Committee Chairman James Comer of Kentucky requested the review in March. He said the findings support a package of fraud-prevention measures already passed by the House and awaiting consideration in the Senate.
“Today’s GAO report confirms that the House Oversight Committee’s fraud prevention bills will provide critical new tools to combat rampant waste, fraud, and abuse in federally funded, state-administered programs,” Comer said. “The Senate must pass these bills immediately so we can equip federal agencies with additional tools to safeguard federal programs.”
GAO said the report is the first in a planned series examining fraud risks in federally funded programs administered by states and other nonfederal entities.
