Riksrevisionen

Swedish National Audit Office (RiR)

Incorrect payments in social insurance - Control activities of the Swedish Social Insurance Agency Read full summary in English

2016 report R I R 2 0 1 6 : 11

In 2014 the social insurance system accounted for six per cent of GDP. The long-term sustainability of a system of that magnitude requires that the public perceives its purpose to be important, that it is well administered and that it is as free of abuse as possible. It must also be financially stable over time, since major fluctuations impact other areas of the central government budget. When these things function as they should, the system is perceived to be legitimate and enjoys public confidence.
According to available estimations, almost SEK 20 billion had been paid out incorrectly from the social insurance system as a whole. According to the estimates made, about SEK 1.2 billion had been underpaid and the rest was made up of benefits where the person insured had received overpayment.
The Swedish NAO audited the work of the Government and the Swedish Social Insurance Agency to prevent incorrect payments in the period 2012–2015. The audit focused on the benefits for which the Swedish Social Insurance Agency is responsible. The audited benefits account for half of the insurance expenditure, half of the payments that are incorrect and for more than 70 per cent of the amount the Swedish Social Insurance Agency demands back every year. These benefits are assistance allowance, housing allowance, sickness compensation, parental benefit and temporary parental benefit. The selection is deemed to provide a good picture of how the overall work of the Government and the Swedish Social Insurance Agency to prevent incorrect payments has been conducted. In the latest study incorrect payments of these benefits amounted to about SEK 8 billion.

In the report page 2-3

- An important premise for preventing incorrect payments is knowing their scope. Knowing the scope is important so as to be able to rank the importance of various benefits and to estimate whether the work of preventing the incorrect payments has achieved the desired effect. The scope can also serve as a basis for analysing how effective the initiatives have been. Within the framework of incorrect payments there are components that cannot be measured using ordinary statistical methods. The FUT Delegation, the collaborative project and the Swedish Social Insurance Agency have carried out scoping studies by using a method called Expert Elicitation. In brief, this means that experts of various kinds systematically make estimates of the size of the error, based on their own specialist knowledge combined with available statistics. The individual estimates are then combined into a total assessment. The method, which is also used internationally, is not exact, but was considered by the FUT Delegation, the Swedish Social Insurance Agency and the collaborative project to be the best way of measuring when the volume of hidden statistics is large. Both the FUT Delegation and the collaborative project submitted proposals that entailed a regular scoping study.

- The latest scoping study (in which Expert Elicitation is a component) was conducted in 2010. This indicated a total amount of incorrect payments of just under SEK 16 billion for social insurance, SEK 8 billion of which can be attributed to the benefits included in this audit. After 2010 neither the Government nor the Swedish Social Insurance Agency have conducted or requested any new study that can show the size of the incorrect payments.

In the report page 4

- The Swedish NAO sent a questionnaire to the insurance officers for the respective benefits being audited. It shows that they consider that speed of processing of cases has been given precedence over correctness. Moreover, the questionnaire shows that case officers have omitted to investigate suspected errors due to lack of time or lack of knowledge of how they should proceed. The questionnaire also showed that case officers have requested more time for the individual cases and more information about errors.

- An examination of the Swedish Social Insurance Agency’s annual reports shows that recovery claims amount to more than SEK 1 billion for 2014. If the result, SEK 8 billion, of the latest scoping study in 2010 is assumed to be correct, the Swedish Social Insurance Agency has paid out more than SEK 7 billion too much. This would mean that less than 13 per cent of the incorrect payments have been discovered. At the same time the stock of receivables is growing and in 2015 it was about SEK 3.5 billion. To this can be added that the number of ongoing recovery claims almost doubled between the years 2012 and 2014, from just over 23 500 to just under 47 000. The number of claims that are older than one year changed from 0 to 23 per cent in the same period. The great increase in recovery claims is explained by the service receiving a lower budget allocation in 2014.

In the report page 5

- The efforts of the Swedish Social Insurance Agency to reduce incorrect payments are difficult to evaluate since there is no reference data for the size of the amounts being incorrectly paid out. Before November 2015 it has therefore not been possible either to assess whether the controls implemented have been cost-effective or how effective the recovery operations have been, since there is no reference data to show their costs.

- Moreover, it is not possible to evaluate the Swedish Social Insurance Agency’s strategy of conducting controls as early as possible, as there are no estimates of how the strategy is expected to be able to impact payments. However, statistics from the Swedish Social Insurance Agency show that the number of control investigations has decreased, whole control investigations with measures taken have increased. This indicates that the precision of the Swedish Social Insurance Agency’s work has improved. The Swedish Social Insurance Agency has also implemented an organisational change in which control investigation and payment control have been concentrated to the Control area of operations and the recovery and claims operations have been concentrated to the Repayment area of operations. In that way the Swedish Social Insurance Agency considers that it can follow up costs better.

The risk cases visible on this page are collected and described by the e-Government Subgroup of the EUROSAI IT Working Group in contact with author Supreme Audit Institutions (SAI). In the same way, analytical assumptions and headings are chosen by the Subgroup. We encourage you to read the original texts by SAIs - to be found in the linked files.