A government watchdog agency was able to secure nearly two dozen Obamacare-subsidized health insurance plans using fictitious applications during a test of anti-fraud protocols.
The Government Accountability Office published a report on Wednesday at the behest of House Republicans that outlined how the agency obtained subsidized Obamacare plans for 23 out of 24 fictitious applications submitted for the 2024 and 2025 plan years.
The GAO report comes as both the House and Senate are struggling to come together for a solution regarding the enhanced premium tax credits that were originally passed by Democrats as a COVID-19 relief measure and are set to expire at the end of 2025.
Democrats have garnered support from some centrist Republicans to pass a so-called “clean extension” of the subsidies before the end of the year to prevent out-of-pocket insurance premiums from doubling on average for the 24 million Obamacare enrollees come 2026.
But GOP fiscal hawks have argued that the enhanced premium tax credits have increased fraud within the Obamacare insurance marketplace because they do not impose income caps for eligibility and that they create zero-dollar premiums for people under 150% of the federal poverty level.
Rep. Jodey Arrington (R-TX), chairman of the House Budget Committee and one of the three GOP leaders who requested the GAO report, called the findings “a bombshell” in a statement and blamed Democrats for the “fraud-ridden subsidies.”
“There is absolutely no justification for perpetuating these subsidies or the failed government-controlled Obamacare system Democrats are artificially propping up,” Arrington said of the report.
Researchers with the GAO used invalid Social Security numbers to generate fictitious accounts and provided income levels below 400% of the federal poverty line, which would have been eligible to receive the tax credits prior to the pandemic-era extension.
Four of the fictitious accounts were established for the 2024 plan year, and another 18 were established for 2025. Of those for 2024, the GAO estimates that the federal government paid $2,350 per month for each applicant, or roughly $113,000 total for all four.
The GAO did not provide cost estimates for the amount of premium tax credits paid out for 2025, since the year is just shy of being over.
Researchers also found more than 58,000 SSNs receiving subsidies matched Social Security death records in 2023, amounting to $94 million in tax credits paid out to deceased enrollees.
The watchdog agency also uncovered that the Internal Revenue Service has not been completing all of the required end-of-year evaluations for subsidy eligibility, costing taxpayers billions of dollars.
Obamacare subsidies are paid through advanced premium tax credits, which require enrollees to estimate their next year’s income to determine the subsidy amount they will be eligible for during the plan year’s open enrollment window.
The IRS is supposed to square the enrollee’s estimated income the year before with the amount they report on their next tax return, but the GAO “could not identify evidence of reconciliation” for $21 billion in advanced premium tax credits.
That means roughly one-third of enrollees were not matched with their tax returns to verify that they received the proper subsidy amount based on their income.
HHS KILLS BIDEN NURSING HOME MANDATE THAT WOULD HAVE REQUIRED 102,000 NEW STAFF
Brian Blase, head of the Trump-aligned Paragon Health Institute, wrote in an analysis on the GAO’s findings that they prove Obamacare “exchanges lack even minimal oversight” and that fraud would be worse if Congress reissues the enhanced subsidies.
“After more than 10 years of [Obamacare] implementation—and billions spent on verification systems—the exchanges remain extremely vulnerable to ineligible enrollment, fraud, and abuse,” Blase wrote. “These problems exploded with the COVID-era subsidy boosts and would continue to flourish if the COVID-era subsidy boosts are extended.”
