The Fiscal Zombie Apocalypse

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Zombies are so hot right now. They have their own impeccably designed AMC show, just like Don Draper. The walking dead stalk the pages of best-sellers and screenplays. You can even pay for the privilege of being chased by them in a 5K— call them the jogging dead.

Unfortunately, the undead are also in your wallet.

Dead people get their hands millions in tax dollars through improper payments of Social Security benefits, federal pensions, and housing subsidies— and that’s just this month’s headlines.

The Social Security inspector general estimated in early September that the strapped federal program has paid out more than $40 million to recipients who were deceased and registered in its “Death Master File.”

One man told CNNMoney that he notified Social Security four years ago that his mother had passed away, but he still can’t get the agency to stop sending her checks every month.

Social Security ran an audit in 2008 and found that about 2,000 deceased citizens were receiving benefits despite the fact that their relatives had reported their deaths to the agency. That’s without counting overpayments & fraud! It overpaid about $300 million to beneficiaries and mistakenly paid out $7.3 million to those who shouldn’t have gotten payments.

But Social Security’s mistakes are small potatoes next to Office of Personnel Management’s problem with human reanimation:

In the past five years, the Office of Personnel Management has made more than $601 million in benefits payments to deceased federal annuitants, according to the agency’s inspector general. Total annual payouts range between $100 million and $150 million…

Last October, an investigation by the office of Sen. Tom Coburn (R-Okla.) concluded that the government had paid nearly $1 billion to at least 250,000 dead people since 2000.

The stimulus program stimulated the deceased, according to a 2010 inspector general report:

The federal government last year sent about 89,000 checks of $250 each to dead or incarcerated people through the Obama administration’s economic stimulus program, according to a watchdog report…About 71,600 recipients were dead before the SSA certified their payments, receiving a total of $18 million, according to the report. An additional 17,300 inmates received a total of $4.3 million.

And, why leave all the fun to the federal government? New York City just found out it paid out $11.8 million in rent subsidies to 4,000 people who are too dead to enjoy their affordable apartments.

Medicare has a problem with zombie doctors, according to a 2008 inspector general report:

Medicare has paid as much as $92 million since 2000 to medical suppliers who billed the government for wheelchairs and other home equipment purportedly prescribed by physicians who, according to records, were dead at the time, congressional investigators said yesterday.

Surely they’ve fixed this glaring problem by now, though, right? Don’t count on it:

The Centers for Medicare and Medicaid Services (CMS) honored about 500,000 such claims despite pledging six years ago to correct the problem, which was identified by the Health and Human Services Department’s inspector general in 2001.

A 2002 General Accountability Office study on military hospitals (Washington Post):

Record-keeping at some military hospitals is so bad that millions of dollars in insurance payments are being lost and hundreds of patients may be using the Social Security numbers of dead people to get free health care, congressional investigators say.

The General Accounting Office, in a review of military hospitals in Georgia, Virginia and Texas, said it also found potentially fraudulent uses of government credit cards and inadequate records of prescription drug inventories and usage.

That’s $40 million in Social Security payments, $100 million yearly in federal pension payments, $92 million in Medicare payments, and $18 million in stimulus payments, just in a cursory review of recent we-pay-dead-people-with-our-tax-dollars stories. For perspective, the average venture capital fund in 2010 was about $149 million, so OPM alone pays out the equivalent of an entire venture capital fund per year to dead people.

Imagine how many businesses might be started with that money if it weren’t going to the grave.

In unrelated news, between 77 and 81 percent of Americans who are still alive have lost faith in government.

Mary Katharine Ham