CAGW: Massive Obamacare Fraud Vulnerability Exposed

For Immediate Release Contact: Curtis Kalin 202-467-5318
September 13, 2016  

(Washington, D.C.) – Citizens Against Government Waste (CAGW) expressed exasperation after the Government Accountability Office (GAO) released the final results of its 2015 undercover tests on the Affordable Care Act’s (ACA) fraud prevention capabilities.  Amid naïve proclamations by President Obama that the ACA is “working exactly as it’s supposed to,” the GAO report reveals the sad reality that this law is uniquely prone to fraud and taxpayers have good reasons to worry.

GAO began “secret shopper” investigations in 2014 to test whether or not the federal healthcare exchange (marketplace) and select state marketplaces were able to detect and prevent falsified applications for subsidized health coverage from being accepted.  Those tests found that 11 of 12 fictitious identities received coverage and after a call to the marketplace in 2015, 10 of those 11 were re-enrolled for the following coverage year.

On September 12, 2016, GAO released the final results of its 2015 testing, which covered the federal marketplace and state exchanges in California, Kentucky, and North Dakota.  The results were similarly jarring.

All 10 fictitious identities that applied for taxpayer subsidies were approved, even after eight of the 10 failed the preliminary identity check.  Investigators were able to obtain subsidies after they provided false proof of income, documentation of citizenship, and Social Security numbers that began with zeroes.  The federal exchange made no effort to validate that information.  GAO also created fake applicants for Medicaid coverage, and the results were not much better:  seven of the eight fictitious applicants were approved for subsidized coverage. 

Perhaps the most distressing revelation in this report is the following admission from federal and state marketplace officials:  “The marketplace or Medicaid offices only inspect for supporting documentation that has obviously been altered.  Thus, if the documentation submitted does not show such signs, it would not be questioned for authenticity.”

CAGW President Tom Schatz said, “The Congressional Budget Office estimates that subsidized health coverage through Obamacare will cost taxpayers $866 billion over the next ten years.  The fact that there is still no reliable system in place to prevent rampant fraud is a bad omen for taxpayers.  This damning report provides further justification for this flawed law to be completely overhauled and replaced.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government. 

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