The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Will the Senate Close the Door to Obamacare Fraud?

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Yesterday, the House of Representatives passed H.R. 2775, legislation that requires the Department of Health and Human Services (HHS) to have a program in place that verifies the household income and coverage requirements of individuals and families applying for taxpayer-funded subsidies and credits to help them purchase health insurance under Obamacare.  By law, the credits and subsidies are only supposed to be available to individuals and families that meet certain income levels.  Those levels are households with incomes up to 400% of the federal poverty level.  Currently, that amount is $45,960 for an individual and $94,200 for a family of four.

Why did Rep. Black (R-TN) sponsor and 235 members of the House support this legislation?  You may recall last July that HHS quietly announced that it would not verify the income eligibility of millions of Americans that will apply for insurance subsidies, which taxpayers will dole out once Obamacare gets underway next year.  I wrote about it here.

No doubt, even though checking income eligibility is required by law, it appears HHS does not have the capability to do it and has simply chosen to ignore the law, a continuing pattern in the Obama Administration.  Instead, HHS will allow applicants to self-attest that they are legally eligible for the taxpayer funds.  It’s another sign Obamacare is not ready for prime-time and a pending train wreck.

The Wall Street Journal put it this way:

The Administration argues that the fear of later HHS audits will keep applicants honest, though the threat of such checks has hardly prevented other fraud. The Treasury Inspector General estimates that 21% to 25% of Earned Income Tax Credits go to people who aren't eligible.  An equivalent rate of fraud in ObamaCare could mean $250 billion in bad payments in a decade.  And does HHS really plan to claw back overpayments from individual exchange participants?

Continuing the campaign mantra of “hope and change,” possibly the Obama Administration is hoping that unscrupulous people will change and not rip-off taxpayers in Obamacare like they do in Medicare, Medicaid, and practically every other federal program.  (In 2011, Medicare improper payments amounted to about $29 billion and $22 billion for Medicaid.)

Not verifying an applicant’s household income opens the door to massive fraud.  What will stop an individual who really makes $100,000 a year but stating they only make $40,000 a year from applying for a premium cost-sharing subsidy in his or her state’s Obamacare exchange if no one bothers to check their income?  How long, if ever, will it take for the person to be caught by the IRS, an agency that has already proven to be ineffectual in tracking scams?  Clearly it is a risk many swindlers will take, just as they do today in Medicare and Medicaid.

Now the bill goes to the Senate for consideration.  Senator Tom Coburn (R-OK) has introduced his own version of the House bill, S. 1455.  He has also introduced an amendment (Admt 1867) to the energy bill (S. 1392) that is currently under debate in the Senate.  Whether Senate Majority Leader Harry Reid (D-NV) will allow a vote on the legislation is another matter.

Here is the Council for Citizens Against Government Waste’s press release on the issue.

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