Government Watchdog Report Shows How Easy It Is to Fraudulently Access Subsidies Under Obamacare

On January 1, the day that
Obamacare’s primary insurance coverage expansion mechanisms kicked
in, former Health and Human Services Secretary Kathleen Sebelius
submitted a
letter to the president.

On the very first page of the letter, Sebelius personally
certified that Obamacare’s health insurance exchanges “verify that
applicants for advance payments of the premium tax credit and
cost-sharing reductions are eligible for such payments and
reductions” as required by the law. “When a consumer applies for
insurance affordability programs, including advance payments of the
premium tax credit and cost-sharing reductions, the Marketplace
[the exchanges] verifies application information provided by the
consumer” in order to assess eligibility.

In short, when people apply for Obamacare’s health insurance
subsidies, there’s a robust, reliable system in place to check
their documentation and determine whether or not they are really
eligible.

But as it turns out, there isn’t. Not really. Not one that
actually works, or even really attempts to work.

Undercover investigators from the Government Accountability
Office (GAO) spent some time this year attempting to see if it
would be possible to get subsidies using false application
information. They set up fake names and Social Security numbers
that aren’t real, then claimed citizenship or legal residence,

according to the AP, which obtained an early copy of the GAO
report. They submitted applications with income amounts that should
have been too high to get subsidies. In other words, they fed the
system blatantly fraudulent information that should have been
swiftly rejected.

 But the majority of their attempts were successful anyway
(the AP says 11 of 18; The New York Times
reports 11 of 12). Indeed, the agency is still paying its share
of the premiums on those accounts, because the Obama
administration, which certified the validity of its subsidy
verification system, just a few months ago, hasn’t caught on to the
fraudulent accounts yet.

The GAO did not rely on complex schemes or trickery. Instead,
they called, or went online, and worked through the application
process. Of the six telephone attempts that the agency attempted,
five went through. The lone rejection occurred when the GAO
investigator refused to supply a Social Security number at all.

It’s not even clear if there is a meaningful system to check and
verify application information. The federal contractor supposedly
in charge of weeding out fraudulent applications
told the GAO that “it does not seek to detect fraud and accepts
documents as authentic unless there are obvious alterations.” The
contractor also said that because applicants supply copies of their
paperwork, it cannot determine their authenticity.

The AP article suggests that the possibilities for fraud are
limited because individuals cannot themselves access the funds paid
for subsidies. But even still, the program is clearly susceptible
to abuse by people who do not qualify for subsidies under the law.
And neither the administration, which wants to sign up as many
people as possible regardless of actual eligibility, nor the
insurers, which get paid for each person who signs up, have much of
an incentive to make the system work better.

The upshot, then, is this: Not only did the administration not
set up a working verification system, they lied about it and said
they did.