Government “undercover” study: Obamacare subsidies still “subject to fraud”

By Deborah Nelson

Taxpayer-funded Obamacare health insurance subsidies are still subject to fraud, a U.S. Government Accountability Office study has found.   The study, released yesterday, compares results from a 2016 enrollment period study to prior reports, which also indicated a potential for enrollment fraud.

The subsidies are not paid directly to enrollees, but reduce the costs of health insurance premiums and in some cases, copayments.  Enrollment numbers also determine payments to states who have expanded Medicaid.  The Federal Government will fully reimburse those states through 2016 for newly eligible Medicaid enrollees.

To test enrollment controls, GAO submitted fictitious applications, some of which used nonexistent Social Security numbers.  The fake applications tested different eligibility factors, including identity, prior income tax filing, Medicaid eligibility and immigration status.

In 2015, 17 of 18 false applications were approved.  In 2016, 12 of 12 were approved.

GAO said the Centers for Medicare & Medicaid Services (CMS), who process Obamacare applications, is required to take applicants’ word on income and tax filings until the government can come up with a way to reliably check the information.

Bureaucratic snarls in other areas of government contribute to the problem.

For example, insurance marketplace officials must take applicants’ word on whether they filed a tax return the prior year, because of a “lag time” between tax filings and the time they appear in IRS systems.

Obamacare, officially titled The Patient Protection and Affordable Care Act (PPACA), provides for the establishment of health-insurance marketplaces through which private issuers can sell qualifying health-care coverage, and makes subsidies available to enrollees who meet certain income and other requirements.

According to the Congressional Budget Office, the estimated cost of subsidies and related spending under the act is $56 billion for fiscal year 2017, and totaling $866 billion for fiscal years 2017–2026, per GAO.

“The results, while illustrative, cannot be generalized to the full population of enrollees,” according to the report.

The agency also found that Obamacare enrollment is concentrated among a relatively small number of insurers in most states.

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