Loan fraud, testing shortages and incomplete health data continue to plague the U.S. coronavirus response, but the federal government has been able to correct some of its earlier missteps, like sending millions of stimulus checks to the deceased, according to the Government Accountability Office.
The U.S. has spent $1.5 trillion of the $2.6 trillion that Congress has allocated to confront the health and economic fallout from the pandemic. Key issues, including the potential for fraudulent small business loans and testing problems continue to be a concern, the GAO said in a
The report also pointed out new problems that have arisen, including inconsistent school re-opening guidelines and the possibility that millions of people have missed out on $1,200 stimulus payments.
Here are the main takeaways:
Payments to the dead returned
The Internal Revenue Service has reclaimed about $700 million of the $1.2 billion worth of stimulus money sent to people who had died, roughly 57 percent of the mistaken payments. A GAO report in June found that the IRS sent about 1.1 million checks to individuals who had died. The report estimates that even more returned payments are likely once a mail backlog at the agency eases.
Many of the payments were returned voluntarily. The IRS has instructions on its website about how to give back the money, but hasn’t sent letters telling relatives of the deceased how to do so. The Treasury Department also canceled some of the checks.
Paycheck Protection Program problems
The GAO reported concerns by groups representing lenders about the uncertainty and complexity of the process to have Paycheck Protection Program loans forgiven. That could result in delays in companies getting their loans converted into grants. The watchdog also continued to press the Small Business Administration to implement oversight and audit plans that it said hadn’t been finalized as of Aug. 14.
The SBA had approved more than 5.2 million loans totaling $525 billion when the program closed on Aug. 8 with almost $134 billion in remaining funds. Proposals to extend PPP and allow hard-hit smaller firms to apply for a second loan have languished as negotiations on a broader stimulus package have stalled.
Loans can become grants if borrowers spend most of the proceeds on payroll and maintain salaries and headcount, and about 56,000 loan forgiveness decisions from lenders had been submitted as of Sept. 8, the report found. But lending groups say that there are still questions about the process and that it needs to be simplified, the GAO said. The demands of the process and lack of clarity have led to “lender fatigue,” which could mean less participation in future rounds of the program, the watchdog said.
As of Aug. 8, some 311,000 loans totaling about $46 billion had been canceled, according to the report. Some firms returned money after a public outcry about larger companies taking funds, while other businesses expressed concern that they could be forced to repay loans they thought would be grants.
About 15 percent of all loans of more than $2 million were canceled, but 75 percent of canceled loans were less than $50,000, the report said. The SBA hasn’t provided a detailed accounting of PPP loans canceled because of returns, duplicates or other reasons.
Small business loan fraud
The GAO said it continues to be concerned about the potential for fraud and is working on internal controls and prevention for the separate Economic Injury Disaster Loan program run by the SBA that provided loans as well as advances that didn’t have to be repaid.
The SBA’s Inspector General said in a July alert there were more than 5,000 instances of suspected fraud, as well as more than $250 million in aid given to potentially ineligible recipients and $45.6 million in potentially duplicate payments. A Bloomberg Businessweek analysis of SBA data last month found the program might have sent more than $1 billion to places the money shouldn’t have gone.
Incomplete, inconsistent data
The U.S. Centers for Disease Control and Prevention and the Department of Health and Human Services have incomplete data of the race and ethnicity of individuals who test positive for Covid-19, are hospitalized or die from the virus.
The CDC collects race data for hospitalized patients, but only from 14 states — representing roughly 10 percent of the U.S. population, according to the report. HHS requires testing laboratories to report demographic data, but some said it was difficult to report that information because health-care providers might not collect that information from the patient.
The CDC says it doesn’t have the authority to require states to report race and ethnicity data for cases and can only get that information when they submit it voluntarily. Additionally, the CDC doesn’t have a plan to study the long-term health effects on individuals who contracted Covid-19, particularly as it relates to race and ethnicity.
Unclaimed stimulus payments
The Internal Revenue Service should determine how many people have yet to receive their $1,200 stimulus payments, the GAO said, adding that the agency plans to send letters to about 9 million taxpayers who might qualify for the payments. The GAO recommends that the agency do more, through better communication, to determine who might not have received the payments.
“The lack of such information could hinder outreach efforts and place potentially millions of individuals at risk of missing their payments,” the report said.
The IRS in a statement in response to the report said they “have prioritized focusing on getting actionable information to assist individuals who may be eligible for” a stimulus payment, rather than estimating a number.
Testing capacity still lags
Testing capacity increased from June to July but remained relatively flat from July to August, the report found. Increased demand for tests and supply shortages led to delays in tests.
Testing delays could continue if future demand surges. Quest Diagnostics Inc. said waits for test results were seven days or more in late July. By early September, wait times for 97 percent of tests from six major laboratories were reduced to three days, HHS said.
Additionally, HHS has paid only about 8 percent of its $14.4 billion of testing-related obligations. The department said the small share of expenditures as a share of obligations was because of states using the funds.
School confusion
As schools struggle to reopen with in-person classes amid rising coronavirus cases in some states, the GAO report expressed concern about “the lack of cogent, clear and consistent federal guidance on the operating status of K-12 schools.”
Direction from the CDC and the U.S. Education Department on screening students and employees, what to do if a student or staff member tests positive for COVID-19 and on mitigation measures has been inconsistent, the GAO report said. Threats from the Trump administration to withhold funds from schools that didn’t reopen also didn’t align with an approach of making decisions based on reducing risk of infections, the watchdog said.
