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.