Meg Whitman’s Claim of $7.5 Billion in State Fraud Assessed
On May 17, GOP gubernatorial candidate Meg Whitman told an audience of approximately 150 persons in Roseville that $7.5 billion a year in fraud occurs annually in three state programs: welfare, health care for the poor and in-home care for the elderly.
Logic would suggest that if the volume of corruption Whitman claims happens annually were taking place, a grand jury would not be necessary to discover it.
Using the California Budget Project’s number, $6.2 billion total is spent on the state’s welfare program, CalWorks. Some $3.3 billion is given out in monthly checks, $1.1 billion in employment-related spending, $1.1 billion in childcare and $804 million in local county administration costs.
The federal government matches state spending on a more than $4 to $1 ratio.
In his May Revision, Gov. Arnold Schwarzenegger proposes elimination of the program October 1, 2010 for savings to the state of $1.1 billion.
Extrapolating from $1.1 billion for savings over three quarters of the fiscal year, a full year’s state costs would be $275 million more for a total of roughly $1.4 billion.
The In-Home Supportive Services program, offering care for the elderly poor, has annual spending of $5.5 billion, according to the Legislative Analyst in a recent report.
Of that total, the federal government shoulders 50 percent of the costs in caring for 99 percent of the program’s 430,000 participants. That’s $2.75 billion. Counties assume 17.5 percent of the costs, $963 million. The remaining 32.5 percent is paid by the state. That’s $1.8 billion.
As proposed in the governor’s budget plan for the fiscal year beginning July 1, Medi-Cal expenditures are nearly $37 billion, of which $28 billion comes from the federal government and $9 billion from the state’s general fund. That’s a decrease of $2 billion from the current fiscal year’s state pay-out of $11 billion.
If, as Whitman says, the $7.5 billion in fraud is shorting the state – not the federal government – the universe of fraud would be contained within the total state spending in those three programs: $1.4 billion plus $1.8 billion plus $9 billion.
Total: $12.2 billion.
If $7.5 billion of that $12.2 billion is fraud that means more than 61 percent of spending in those three programs is bogus.
Logic suggests hospitals, case workers, emergency room physicians, state administrators, nurses, drug companies, employment training facilities, childcare providers, in-home care workers and the myriad other participants in the three programs would have to work serious overtime to do their jobs and bilk the state 61 cents on the dollar.
Nor does it seem plausible such a level of corruption would go unnoticed, even without creation of a statewide grand jury.
A telephone call to Whitman’s campaign seeking clarification of her $7.5 billion figure was not returned May 17.
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