PJ Media

HHS Overseer Finds Faulty System for Determining Obamacare Subsidies

WASHINGTON — The federal Health Insurance Marketplace and several state exchanges that permitted consumers to apply for mandatory coverage under Obamacare failed to implement adequate safeguards for determining who was eligible to receive subsidies to help defray the costs of the premiums.

According to a pair of reports issued this week by Daniel R. Levinson, the inspector general for the Department of Health and Human Services, about 2.9 million “inconsistencies” were uncovered in the applications of those seeking eligibility under the Affordable Care Act during the first three months of this year. To this point, the department has proved unable to clear up 2.6 million of those inconsistencies – 89 percent – because its automated system used to determine eligibility is not yet fully operational.

Most of the discrepancies, according to the report titled “Marketplaces Faced Early Challenges Resolving Inconsistencies with Applicant Data,” involved the income and citizenship of those seeking health insurance. Only those below certain income levels are eligible for federal subsidies and only American citizens are eligible for the program.

“The Federal marketplace was generally incapable of resolving most inconsistencies,” the report said. “Without the ability to resolve inconsistencies in an applicant’s eligibility data, the marketplace cannot ensure that an applicant meets each of the eligibility requirements for enrollment in a QHP (qualified health plan) and when applicable, eligibility for insurance affordability programs.”

Each application, Levinson said, “can have multiple inconsistencies. Inconsistencies do not necessarily indicate that an applicant provided inaccurate information or is enrolled in a qualified health plan or is receiving financial assistance through insurance affordability programs inappropriately.” Even when consumers provided documentation verifying the information they provided, the government often proved unable to resolve conflicts between their official records and data on application forms.

Levinson asserted that the Department of Health and Human Services failed to implement the controls necessary to perform basic tasks like validating Social Security numbers and verifying the identity of people who applied via telephone.

In the 15 states that operated their own marketplaces outside of the federal system, four reported that they were unable to resolve inconsistencies, seven said they resolved inconsistencies without delay, one reported it resolved only some inconsistencies, and three reported that their state Medicaid offices resolved inconsistencies.

“We also found that data on inconsistencies are limited,” the inspector general said. “For example, the federal market place could not determine the number of applicants who had at least one inconsistency. Finally, marketplaces faced challenges resolving inconsistencies despite having policies and procedures in place.”

According to the report, the federal marketplace maintains it will verify applications with inconsistencies when the eligibility system becomes operational.

The inspector general’s report opens up a new line of attack for those who remain opposed to the Affordable Care Act, passed in 2010, which remains the cornerstone of President Obama’s policy agenda.

Under what has popularly become known as Obamacare, U.S. citizens are required to obtain some form of health insurance. The federal government provides subsidies to those unable to afford the premiums. Large corporations, beginning in 2015, will be required to provide employees with health insurance.

The marketplace and state exchanges were set up as websites to allow those who needed to purchase insurance a one-stop shopping place where they could compare and contrast available policies. The launch late in 2013 proved disastrous, with sites consistently crashing and customers facing extended delays.

Most of those issues generally were resolved, though not in especially rapid fashion. Even so, 8 million people have signed up for coverage under the exchanges, exceeding the expected 6 million.

In a letter to the inspector general responding to the findings, Marilyn Tavenner, administrator of the Centers for Medicare and Medicaid Services, which is responsible for most Obamacare operations, said the administration is working on a plan to address the ongoing problems and that some of the computer problems complicating the situation have now been resolved.

“It is not surprising that there are inconsistencies between some information provided by application filers and the electronic data sources, and, in fact, this issue is addressed in the Affordable Care Act,” Tavenner said. “This is the first year that consumers have applied for coverage through the Marketplaces. Therefore, consumers are inexperienced with the eligibility process, which could lend to application mistakes.”

Most of the discrepancies, she said, have been addressed in the consumers’ favor.

Congressional Republicans have been keeping an eye on application discrepancies for some time. On May 27, Senate Republican Leader Mitch McConnell, of Kentucky, and two other GOP lawmakers addressed a letter to Levinson asking him to investigate whether some applicants were receiving improper subsidies, expressing concern regarding insufficient Internal Revenue Service oversight.

Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee, which has some jurisdiction over the Affordable Care Act, noted that last year, on July 5, 2013, the Obama administration decided to abandon the verification process for the exchanges, opting instead for an “honor system.”

“Sadly, the most consistent part of the health law’s implementation has been the millions of ‘inconsistencies’ without a system in place to address them,” Upton said. “Vital portions of the exchanges still sit incomplete, generating serious questions about the system’s ability to process inconsistencies or handle next year’s open enrollment period. The reports underscore the perils of the administration’s incompetence, the reckless rollout and the systemic disregard for taxpayer dollars.”

Sen. Mike Johanns (R-Neb.) said he was “deeply disturbed – but sadly not surprised” by the most recent revelations related to the healthcare law.

“From court challenges to faulty computer systems, the time for the administration to admit this law is never going to work is long overdue,” Johanns said. “They must, at the very least, stop plans to automatically re-enroll people for Obamacare until they can certify eligibility and ensure tax dollars only go to Americans who qualify.