Lawmakers Push for Unemployment Insurance Reforms After Pandemic Fraud

In light of significant fraud and improper payments in the unemployment insurance (UI) program during the COVID-19 pandemic, Congress is moving to implement reforms. The Government Accountability Office estimates that between $100 billion and $135 billion were lost to fraud nationally, with Illinois alone losing $3.2 billion.

U.S. Rep. Darin LaHood, R-Peoria, chair of the U.S. House Ways and Means Work and Welfare Subcommittee, emphasized the need for congressional action to rebuild trust in the UI program, which was severely impacted by identity theft, fraud, and claim delays during the pandemic. California experienced notable losses, with $800 million in benefits sent to 45,000 prisoners, highlighting the widespread issues.

The U.S. House has passed the Protecting Taxpayers and Victims of Unemployment Fraud Act, aimed at strengthening program integrity, recovering lost funds, and preventing future fraud. Rep. Michelle Steel, R-CA, noted that improper payments to prisoners and scammers contributed to California’s $18.3 billion federal unemployment insurance loan balance.

Rep. LaHood pointed out that, outside of major economic downturns, states typically receive less than half of the federal tax revenues paid by employers for UI program administration. He stressed the need for more of these funds to be directed to state agencies for necessary system improvements.

During a recent hearing, witnesses identified key areas for reform, including enhancing program integrity through identity verification and upgraded technology, expanding reemployment services to expedite the return to work for unemployment recipients, and ensuring states receive adequate funds to administer the UI program effectively.