UI Overpayments Raise Questions About Ability of New Health Care Exchanges to Avoid Similar Problem

A recent report from the Department of Labor found that the federal government and states overpaid $14 billion in unemployment insurance (UI) benefits in 2011, or about 11 percent of all jobless benefits paid out.  The report raises serious questions about the ability of the new heath care exchanges, which must be created over the next 18 months, to avoid the same mistakes when making subsidy payments.  UI overpayments typically result from an administrative error by the government, the employer, the worker, or a combination of the three.  Moreover, despite repeated initiatives over the past 20 years to reduce the amount of improper UI payments, overpayments remain a frequent problem.  In fact, ten states have overpayment rates greater than 15 percent and no state is lower than 4.5 percent.  If the new health care exchanges have the same overpayment rate for the premium subsidies, that would amount to more than $1.3 billion in 2014 and $5.1 billion in 2016 in overpayments.