The Identity Tradeoff for Federal Business

Federal administration faces a debate: protect privacy or protect the nation’s wallet?

Every year, identity-related fraud in the US government costs the country tens of billions of dollars. This massive loss is affecting all channels of government—from healthcare and Social Security to tax refund fraud and improper payments.

There are several ways in which the federal government can begin to tackle this problem that in increasing in scope every day. The government needs to define and promote the benefits of an opt-in identity to offer citizens, and then work with their policy and legal counsels to expedite their approaches.

The government can lead the way into secure identities online, and we as citizens need to do our part to help the process along by sharing information with the government. There is just too much money changing hands—all in the name of citizen benefits—for us not to do everything we can to make it be done safely and securely, and ensure that it gets to the right people.

Criminals are becoming more sophisticated in how they infiltrate US government systems and programs. To fight back, the government needs to ratchet up its capabilities to ensure that the right benefits are getting to the right people by capturing the right identity information of all citizens who access government programs.

Other countries are using national ID cards to help mitigate the critical national economic and security issues of fraud. However, the states that compose the US have not been able to decide on a system that would be used consistently throughout the country. States have debated whether such a national system would infringe upon their individual state rights. In the US, there is a segment of the population that does not trust government in general, let alone the federal government.

Trust is a two-way street and we need to trust the government to do the right thing with our private information. So how will Americans start trusting the government? Government can begin to build that trust, one interaction at a time.

Fraud is infiltrating the US federal government in a number of ways:

Social Security—Fraud and abuse strike the Social Security Administration (SSA) in a variety of ways. Whether making false claims, concealing facts related to eligibility or buying and/or selling Social Security cards, criminals are conducting fraud every day. The SSA has reported approximately $1.8 billion in overpayments in its Disability Insurance program alone in fiscal year 2011¹.

Healthcare—Medicare fraud is estimated to cost between $60 billion and $90 billion annually². There is fraud at every level—provider, insurer and individual. If the federal government could easily identify all participants in the system and affiliate them with their claims, it would more easily be able to identify the fraudulent transactions—and the criminals.

Revenue—Falsifying identities to file fake income tax returns and then cashing the refund checks is robbing the Internal Revenue Service and US taxpayers of an estimated $26 billion annually. Stopping this criminal practice requires an infallible way to properly identify every individual taxpayer.

Citizens share their personal identity information every day, whether shopping online or using social media. Every week we are offered 10 percent off at a restaurant or a $5 Starbucks gift card for registering our private information with marketers. Why can’t the government collect appropriate identification information of recipients of government benefits? The technology is there: reliable biometrics, secure cryptography and secure operating environments can manage the services and secure the data. Providing citizens with proper incentives might be the answer.

What if the US had a voluntary federal identification program that delivered benefits faster to those who opt-in? What if citizens received their Social Security benefits faster when they share ID information? What if taxpayers were given a 2 percent, anti-fraud bonus on their tax refund when they agree to opt-in to a federal ID program? What if our healthcare system could share data between doctors, eliminate office visits and reduce paperwork by leveraging digital signatures? Many government agencies already are doing just that.

1. http://oig.ssa.gov/newsroom/congressional-testimony/hearing-combating-disability-waste-fraud-and-abuse
2. www.socialsecuritywaste.org/SS%20Issues.htm