Billions in Obamacare Subsidies Probably Fraudulent

No "effective process for resolving inconsistencies for individual applicants for the federal Health Insurance Marketplace."

Democrats love to tout how Obamacare is working, but according to the United States Government Accountability Office (GAO), there could be billions of dollars that have been paid out to applicants who are ineligible to receive the promised federal subsidies under the Affordable Care Act offers.

In its study, GAO found that there was no system put in place that could reconcile all of the information gathered from various government sources in order to spot any inconsistency with applications.

The federal watchdog submitted its report Congress and explained why they did the study: "The Congressional Budget Office estimates the cost of subsidies and related spending under PPACA at $37 billion for fiscal year 2015. GAO was asked to examine the enrollment process and verification controls of the federal Marketplace."

And so they looked at the first open-enrollment period in March 2014 and conducted an investigation to see the "potential vulnerabilites to fraud in the federal Marketplace’s application, enrollment, and eligibility verification processes." Here is what they found:

The Patient Protection and Affordable Care Act (PPACA) requires applicant information be verified to determine eligibility for enrollment or income-based subsidies. To implement this verification process, the Centers for Medicare & Medicaid Services (CMS) created an electronic system called the “data services hub” (data hub), which, among other things, provides a single link to federal sources, such as the Internal Revenue Service and the Social Security Administration, to verify consumer application information. Although the data hub plays a key role in the eligibility and enrollment process, CMS does not, according to agency officials, track or analyze aggregate outcomes of data hub queries—either the extent to which a responding agency delivers information responsive to a request, or whether an agency reports that information was not available.

In not doing so, CMS foregoes information that could suggest potential program issues or potential vulnerabilities to fraud, as well as information that might be useful for enhancing program management. In addition, PPACA also establishes a process to resolve “inconsistencies”—instances where individual applicant information does not match information from marketplace data sources. GAO found CMS did not have an effective process for resolving inconsistencies for individual applicants for the federal Health Insurance Marketplace.

A detailed example is given for the 2014 enrollment period where 431,000 applicants received $1.7 billion in subsidies. The analysis reveals that CMS did not resolve Social Security number inconsistencies for at least 35,000 of those applicants, which could amount to fraudulent claims of up to $154 million. Nor did they reconcile incarceration inconsistencies with 22,000 applications, leaving $68 million more as possible fraud.

"With unresolved inconsistencies, CMS is at risk of granting eligibility to, and making subsidy payments on behalf of, individuals who are ineligible to enroll in qualified health plans," the report states.

The GAO made recommendations on how to resolve these problems -- and so, it took a government agency to tell another government agency a simple logic problem that should've been obvious and already in place: "consider analyzing outcomes of the verification system, take steps to resolve inconsistencies, and conduct a risk assessment of the potential for fraud in Marketplace applications."

But then again, a government would have to be efficient to do so.

However, as Americans for Tax Reform pointed out, none of this comes as a surprise. They listed nine other reports by GAO and similar entities that are sitting on a pile of fraudulent practices, missed verifications of applicants, and millions in payments to individuals who were never eligible for the subsidies.

The alarms have been sounding. Is anyone hearing them?

Reuters Photo