Obamacare Still Vulnerable to Fraud

By Curtis Kalin

Wastewatcher, March 2017

Even before Congress failed to pass a repeal and replacement for the Affordable Care Act (Obamacare), a November 2016 Government Accountability Office (GAO) report again exposed rampant and systematic fraud in the application process.

“Results of Enrollment Testing for the 2016 Special Enrollment Period,” was the fourth report on “Secret Shopper” tests, which began in 2014.  These investigations were designed to examine whether or not the Obamacare Marketplace could detect and prevent falsified applications from being accepted.  In conducting the studies, GAO submitted fake information on 12 fictitious identities, including Social Security number; citizenship status; household income; and a documentation of a Special Enrollment Period (SEP) triggering event, such as a marriage or the loss of minimum coverage.  The fake applications were submitted to the federal exchange, the Washington, D.C. exchange, and the California exchange. 

The results announced in the November 2016 report were not pretty.  Of the 12 fictitious applicants that applied for taxpayer subsidies, nine were able to obtain them, a 75 percent failure rate.  The report also disclosed that, “for 5 applicants, GAO provided no documents to support the SEP triggering event, but coverage was approved anyway.”  Perhaps the most jarring finding was that, “CMS officials explained that the standard operating procedure in the federal Marketplace is to enroll applicants first, and verify documentation to support the SEP triggering event after enrollment.”  In total, “the nine applications that were approved were also cleared for advance premium tax credit subsidies, which averaged about $1,580 per month, or $18,960 per year.”

GAO reiterated the eight anti-fraud recommendations it made to the Department of Health and Human Services (HHS) in February 2016.  HHS Assistant Secretary for Legislation Jim Esquea claimed the department “takes seriously its commitment to ensuring the program integrity of the Marketplaces,” and HHS “concurred” with the recommendations.  However, to date, GAO considers all eight to be “open” or incomplete. 

Indeed, HHS has failed to resolve this problem for the past three years.  The 2014 GAO secret shopper investigation saw 11 of 12 fake applicants receive taxpayer subsidies.  The 2015 investigation found all 11 were re-enrolled, with five fake applicants receiving higher levels of subsidies than the year before.  The 2016 report divulged that, “although 8 of these 10 fictitious applications failed the initial online identity-checking process, all 10 were subsequently approved.”  Worse yet, “four applications used Social Security numbers that, according to the Social Security Administration, have never been issued, such as numbers starting with ‘000.’”

These reports have routinely exposed Obamacare’s feeble anti-fraud capabilities.  Taxpayers should continue to demand that any continued involvement by HHS be accompanied with genuine, sincere, and effective anti-fraud measures that will safeguard every taxpayer dollar.

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