News & Politics

Feds May Have Paid Billions in Subsidies to Obamacare Fraudsters

Many Obamacare opponents said even before the program was implemented that it was just too easy to commit fraud by gaming the system to get more subsidies that an enrollee was eligible for.

And, in fact, that’s what the Government Accountability Office has found.

The problem is that the Centers for Medicare and Medicaid Services, administrators of the Obamacare program, cannot adequately resolve discrepancies in information on enrollees using the current system. It’s probable that many if not most of those discrepancies are innocent mistakes or mis-entered information. But when it’s so easy to claim a greater amount of Obamacare subsidy simply by fudging a few numbers, you have to think that the fraud is costing the U.S. taxpayer billions of dollars.

Americans for Tax Reform:

The federal government has failed to properly monitor enrollee eligibility for Obamacare, according to a report by the Government Accountability Office (GAO). As a result, the government has made billions of dollars in Obamacare subsidy payments to individuals that may have been committing fraud.

“When the government wastes money, it is wasting OUR money. It is cutting OUR pay. It is damaging OUR lives,” said Grover Norquist, president of Americans for Tax Reform. “And the Obama administration is treating us with contempt.”

As the report notes, the system used by the Centers for Medicare and Medicaid Services (CMS) relies on data sent by three government agencies – the IRS, SSA, and DHS – to check eligibility for Obamacare. However, the system used by CMS is unable to verify many inconsistencies in the data.

This inability to properly verify enrollment has meant billions of dollars have been sent out to enrollees without verifying whether the applicants were fraudulent. As the report notes:

“According to GAO analysis of CMS data, about 431,000 applications from the 2014 enrollment period, with about $1.7 billion in associated subsidies for 2014, still had unresolved inconsistencies as of April 2015—several months after close of the coverage year.”

While CMS has information that could shed light on fraud, it has not developed any procedure to utilize it. As the report notes:

“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.”

These latest findings should not be surprising. Time and time again, watchdogs have sounded the alarm over Obamacare exchange verification and controls.

Some of the other problems that watchdogs have found in verification reveal shockingly inept and incompetent management:

  • A December 2015 report by the Health and Human Services Inspector General (HHS OIG) found that CMS relied entirely on data from health insurers to verify whether enrollees had paid their premiums and were eligible. However, this data was completely insufficient – insurers provided payment information on an aggregate rather than enrollee-by-enrollee basis, making verification all but impossible.

Did anyone think to tell the insurers exactly what kind of information they needed? Or did they just throw up their hands at CMS and give up on verification altogether?

  • A October 23, 2015 report by GAO found that Obamacare exchanges (both state and federal) were failing to verify key enrollment information of applicants including Social Security numbers, household income, and citizenship.

This was the basis for the idea that thousands — perhaps tens of thousands — of illegal aliens are purchasing insurance and getting subsidies through Obamacare.

  • A September 1, 2015 report by the Treasury Inspector General for Tax Administration (TIGTA) found that Obamacare exchanges are failing to provide adequate enrollment information to the IRS for proper payment and verification of tax credits.
  • A August 2015 report by HHS OIG found that the federal exchange is failing to verify Social Security numbers, citizenship, and household income of Obamacare applicants. As a result, the exchange is unable to verify whether applicants are properly receiving tax credits.
  • A July 16, 2015 audit by GAO found that 11 of 12 fake ‘test’ applicants received coverage for the entire 2014 coverage period despite many using fraudulent documents, and others providing no documentation at all. From these 11 applicants alone, paid $30,000 in tax credits.

It goes on and on. But somehow, these reports are buried and few ever read them, while the press finds more exciting things to cover.

If there’s one thing we’ve learned from other federal programs beset by fraud problems, it’s that the easier it is for the law to be broken, the more fraud is committed.