Prisoners, Noncitizens and High Earners At Risk of Getting Obamacare Subsidies

Federal and state-based health insurance exchanges lack sufficient internal controls to prevent ineligible applicants -- such as noncitizens or people who earn too much to qualify for subsidies -- from signing up for benefits under the Affordable Care Act, a watchdog reported.

In a pair of reports based on reviews ending last December, the Health and Human Services Department’s inspector general examined “the extent to which marketplaces resolved inconsistencies between applicants' self-attested information and the data received through the Federal Data Hub or from other data sources.”

After identifying 2.9 million inconsistences in such data as Social Security numbers, citizenship and incarceration status, the exchanges were unable to resolve 89 percent, the watchdog said in one report, “because the system was not fully operational.”

In a second report based on interviews and sample audits of the federal exchange and those in California and Connecticut—both considered successful compared with those of other states—the inspector general determined that “deficiencies in internal controls that we identified may have limited the marketplaces' ability to prevent the use of inaccurate or fraudulent information when determining eligibility of applicants for enrollment in” qualified health plans.

Auditors said “the marketplaces did not have procedures or did not follow existing procedures ….according to federal requirements, or the marketplaces' eligibility or enrollment systems had defects or lacked functionality.”

But the IG stressed that the deficiencies do “not necessarily mean that a marketplace improperly enrolled an applicant… or improperly determined eligibility for insurance affordability programs. Other mechanisms exist that may remedy the deficiency.” The watchdog recommended that the Centers for Medicare and Medicaid Services and the two state exchanges improve internal controls, make public a plan for remedies that includes a deadline, and increase oversight. CMS for the most part agreed with the recommendations.

“It’s not news that Healthcare.gov had tech and data issues at the outset, but we’ve come a long way since then,” a CMS spokesman said in an email to Government Executive. “CMS is working expeditiously to resolve inconsistencies to make sure individuals and families get the tax credits and coverage they deserve and that no one receives a benefit they shouldn't. We are actively reaching out to consumers to provide additional information that supports their application for coverage and verifying their information every day."

CMS noted that it has authority to terminate an improperly enrolled person. And it asserted that incorrect data on a consumer’s application does not always indicate a problem with the enrollment. Often it means the consumer has more up-to-date information, the agency said, giving as an example the fact that the Marketplace could have verified income by checking 2012 tax return information, but a consumer could have switched jobs since those returns were filed.

Sen. Tom Coburn, R-Okla., a longtime critic of Obamacare who is ranking member of the Homeland Security and Governmental Affairs Committee, said in a statement, “The reports released today highlight that the federal government lacks necessary safeguards to prevent taxpayers from providing improper subsidies to illegal immigrants, individuals who are incarcerated, or individuals whose income is too high to qualify for a subsidy. The Obama administration has failed to keep its promise that effective controls were in place to prevent waste and fraud in Obamacare payments. These reports show a trend of broken promises in Obamacare’s botched implementation.”