A federal watchdog said Obamacare’s marketplaces are vulnerable to fraud after an undercover sting revealed serious vulnerabilities.
The report from the Government Accountability Office Monday found that the federal marketplace and several state marketplaces approved 10 applications in 2015 and 12 in 2016 that were fakes and not caught by the Obama administration’s screening process.
Republicans pounced on the results, noting that the GAO was able to slip through other fake applications the year before.
“When a fire is raging, the first thing you do is grab a hose — but there is no urgency by the administration to address the inferno of fraud,” said Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee.
“That the administration has been aware of this since 2014, and has failed to employ proper safeguards, is just the latest incompetence in the health law’s implementation,” said Sen. Orrin Hatch, R-Utah.
The GAO released reports for the last two open enrollments, finding significant problems with how the Obama administration screens applicants for fraud.
For example, for four of the applications trying to get subsidies for 2016 coverage, the GAO used identities from its 2014 sting. None of the applicants filed a 2014 tax return as required by the administration, but all were approved for subsidies.
People must file a tax return to get a subsidy, as the amount is pegged to income levels.
“Marketplace officials told GAO that they allowed applicants to attest to filing taxes if information from the Internal Revenue Service indicated that the applicant did not file tax returns,” the report said.
Administration officials added that one reason they allow that is because of a “time lag” between when the tax returns are filed and when they are reflected in IRS’ systems.
The results from 2015 and 2016 mirrored similar results from a 2014 sting. In 2014, the GAO filed 12 applications to test the marketplaces on verifying the identity or citizenship or immigration status. Illegal immigrants cannot get Obamacare under federal law.
Obamacare gave subsidies to 11 of the 12 fake applications. One of the applications was discounted because the GAO didn’t provide a Social Security number.
For the 11 approved applications, the marketplace asked for more information and supporting documents such as proof of citizenship. However, the process for reviewing and submitting documents was inconsistent and slow, the report said.
The GAO emphasized in the latest reports that the results can’t be generalized to the overall population of Obamacare applicants.
CMS responded that the marketplace “takes seriously the responsibility to protect taxpayer funds.”
The agency added that it has a “robust verification process to make sure people get benefits they are eligible for while protecting taxpayer dollars. Within healthcare.gov we have multiple checks to verify that applicants provide correct eligibility information on their applications, and GAO deliberately circumvented those checks by giving false information which is against the law for actual applicants.”
The agency added it would take into account the recommendations from the watchdog. Within the past year it implemented 43 GAO recommendations from prior reports.
