Last Monday, President Trump established a national task force to eliminate fraud. Its mission is to strengthen oversight of federally funded benefit programs administered by states. But state leaders don’t need to wait on the new federal task force to act before implementing new safeguards to protect American taxpayers.
Recent investigations show that preventing fraud in state-managed benefit programs is a widespread problem. National attention has recently focused on Minnesota following investigations into large-scale fraud schemes involving billions in government funds.
The Justice Department is prosecuting two health care fraud cases in New York estimated to have cost nearly $200 million. The Labor Department is investigating California’s management of unemployment insurance funds after state and federal watchdogs estimated that tens of billions of dollars were lost to fraud during the pandemic.
Nationally, the scale of the problem is staggering. The nonpartisan Government Accountability Office estimated that the federal government may lose between $233 billion and $521 billion annually to fraud, or roughly $4,000 per American household. While it’s unclear how much the nation loses to fraud in state-managed programs, states administer well over $1 trillion annually in federally funded benefit programs, including through programs that have proven vulnerable to fraud.
Lawmakers in Washington are working on promising reforms. In 2025, Congress enacted a law requiring states to use a national database to coordinate Medicaid eligibility and prevent duplicate coverage — a reform projected to save $17 billion over the next decade. Republican lawmakers recently introduced legislation to require states to increase vetting of unemployment benefit applications.
The Trump administration and Congress are also working to strengthen existing tools like the Treasury Department’s Do Not Pay system. Created by President Obama, Do Not Pay is a Treasury-managed data system that helps government agencies screen payments and identify eligible people before federal benefits are paid. The Treasury Department recently estimated that increased use of Do Not Pay helped prevent nearly $12 billion in improper payments last year.
But the system could be made even stronger to prevent misspending. In February, Congress enacted legislation to establish permanent information-sharing between the Treasury Department and the Social Security Administration to prevent government payments to the deceased. Lawmakers are also backing additional reforms to make the Do Not Pay system even stronger by including additional federal and private sector databases that could provide more careful vetting before payments are made, and the Treasury Departments predicts that such reforms could prevent tens of billions in fraudulent payments.
Governors and state lawmakers could take a meaningful step to prevent fraud in state-administered benefit programs by requiring state agencies to use the Do Not Pay system. Since 2019, federal law has allowed state governments to use the Treasury Department’s Do Not Pay system at no additional cost to the state. As of 2023, dozens of states were using the system and saving more than $30 million as a result. Far greater savings could be achieved if states systematically integrated Do Not Pay into the administration of federally funded programs.
Beyond Do Not Pay, states could partner with other federal agencies to deploy useful technologies and data-sharing systems to prevent fraud and misspending. The Pandemic Response Accountability Committee has developed a pilot fraud prevention engine using artificial intelligence that can quickly review government benefits applications to identify potential fraud before payments are made. The head of the Committee recently told Congress that this new tool could serve as a valuable complement to the Do Not Pay system. States could request to integrate the new Fraud Prevention Engine into their state benefit administration systems and, if necessary, Congress could provide legal authority for this kind of information sharing.
A national effort to eliminate fraud in government-benefit programs is long overdue. But fraud prevention can’t be centralized in Washington alone. It must be incorporated into the daily bureaucratic work of government agencies nationwide. Governors who act now can begin to protect American taxpayers, preserve government benefits for those who truly need them, and show that effective governance is still possible.
