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Multiple Reports Show Obamacare's 'Operational Failures,' Hatch Argues

WASHINGTON – The chairman of the Senate Finance Committee has renewed his call to repeal the Affordable Care Act, citing several governmental studies showing deficiencies in the way the massive healthcare law is being administered.

Sen. Orrin Hatch (R-Utah) noted that the Inspector General’s office in the Department of Health and Human Services and the Government Accountability Office have “cumulatively released at least six dozen reports detailing various operation and implementation issues demonstrating the numerous areas where the law is falling short.”

“These reports are specific and focused on key operational failures like enrollment controls or system issues,” Hatch said, including the problematic rollout of the healthcare.gov website in October 2013, intended to provide a marketplace for consumers looking for health insurance, and the implementation of controls to make sure those seeking federal subsidies to purchase insurance actually qualify.

“During undercover testing by GAO, the federal marketplace approved insurance coverage with taxpayer-funded subsidies for 11 out of 12 fictitious phone or online applicants,” Hatch said. “In 2014, the GAO applicants — which, once again, were fake, made-up people — obtained a total of about $30,000 in annual advance premium tax credits, plus eligibility for lower insurance costs at the time of service.”

The fictitious enrollees maintained subsidized coverage throughout the year, Hatch said, “even though GAO sent either clearly fabricated documents or no documents at all to resolve application inconsistencies.”

“Now, it is no secret that I have never been a fan of the so called Affordable Care Act,” Hatch said. “And, as we approach the sixth anniversary of this law and look closely into how it’s working and being implemented, the evidence overwhelmingly shows that I – and the many others who opposed the law from the beginning – have been right all along.”

“The facts speak for themselves,” he added.

But Sen. Ron Wyden (D-Ore.), the committee’s ranking member, asserted claims that the healthcare.gov rollout was botched are “old news” and that “some of the best minds in tech and a new contractor were brought in, they scrambled to overhaul the system, and the exchange was soon up and running.”

Rather than go about “rehashing old news,” Wyden said he would prefer that lawmakers on both sides of the aisle “start pulling on the same end of the rope and solve some real problems.”

“For example, Democrats and Republicans ought to be working together to stoke more competition in the insurance marketplace and bring costs down for consumers,” he said.

Wyden also noted facts show that under the Affordable Care Act, popularly known as Obamacare, the number of Americans without health insurance is at or near its lowest point in half a century. During the most recent enrollment period, nearly 10 million Americans used healthcare.gov to sign up for a plan or re-enroll automatically. And the estimated 160 million people who get their insurance from their employer saw premiums rise by four percent in 2015.

“Working-age Americans in Oregon and nationwide with pre-existing conditions – 80 million people or more – can no longer be denied insurance,” Wyden said.

In testimony before the committee, Seto J. Bagdoyan, director of Audits, Forensic Audits and Investigative Service for the GAO, said his agency found that the Centers for Medicare & Medicaid Services, which administers much of Obamacare, encountered problems detecting and addressing fraudulent or incorrect data submitted by consumers seeking federal subsidies to be used in obtaining health insurance. The primary problem has been the inability of CMS technical systems to retrieve data from Social Security systems, the IRS, and the Department of Homeland Security.

Bagdoyan said his agency found that “CMS did not have an effective process for resolving inconsistencies for applicants using the federal marketplace” accessed under healthcare.gov, and that it failed to resolve about one-third of the inconsistencies in the applications for subsidies process.

For qualified applicants, Bagdoyan said, Obamacare provides two forms of subsidies for consumers enrolling in individual health plans, both of which are paid directly to insurers on behalf of the consumers. One is a federal income tax credit, which enrollees may elect to receive in advance of filing tax returns. The other is called cost-sharing reduction (CSR), a discount that lowers the amount consumers pay for out-of-pocket charges such as deductibles, coinsurance and copayments.

“In our report, for applicants who obtained subsidies but had application inconsistencies, we identified about 1.1 million applications with a total of about 2 million inconsistencies,” Bagdoyan said. “These applications had combined APTC and CSR subsidies of about $4.4 billion associated with them for coverage year 2014. We found, based on our analysis of CMS data, that the agency resolved about 58 percent of the total inconsistencies, meaning the inconsistencies were settled by consumer action, such as document submission, or removed due to events such as life change, application deletion, or consumer cancellation.”

Meanwhile, Bagdoyan said, the GAO analysis determined that about 34 percent of inconsistencies, with about $1.7 billion in associated subsidies, remained open, as of April 2015 — “that is, inconsistencies still open several months following the close of the 2014 coverage year.”

Bagdoyan said the GAO has made several recommendations on how to address the subsidies problems and the Centers for Medicare & Medicaid Services, which administer much of Obamacare, has agreed to implement them all.