White House to Use ‘Honor System’ to Hand Out Obamacare’s Subsidies

by Avik Roy

As Wesley Smith notes below, Sarah Kliff and Sandhya Somashekhar of the Washington Post discovered that the Obama administration plans on relying on “attestations” from applicants ”without further verification” to disburse subsidies in Obamacare’s subsidized insurance exchanges, until at least 2015. As I describe at Forbes, this was the other shoe to drop from Tuesday’s delay of the employer mandate.

The way the law is supposed to work is that, if you have been offered “affordable” health coverage by your employer (“affordable” is defined by the government), you aren’t eligible for exchange subsidies. But now that the administration has waived the requirement that employers report whom they’ve offered coverage to, it’s impossible to enforce that element of the subsidy program. So the government has decided simply to rely on the “honor system”:

“We have concluded that the…proposed rule is not feasible for implementation for the first year of operations,” say the Centers for Medicare and Medicaid Services. “The exchange may accept the applicant’s attestation regarding enrollment in an eligible employer-sponsored plan…without further verification, instead of following the procedure in §155.320(d)(3)(iii).”

And it’s not just there. The feds will also allow people to gain means-tested subsidized coverage on the exchanges without having to…test their means. “For income verification, for the first year of operations, we are providing Exchanges with temporarily expanded discretion to accept an attestation of projected annual household income without further verification.”

Presumably, since the IRS knows your income, it could claw back these excess subsidies afterwards, if it chooses to. But the IRS’ record of impartiality is, shall we say, contested.

Subsidize first, ask questions later?

The goal here is plain as day. The Obama administration is laser-focused on making sure that enough Americans enroll onto Obamacare-subsidized health insurance platforms, because if they do, it will be politically impossible for Republicans to repeal Obamacare in the future.chris conover 

Politics ain’t beanbag, they say. But deliberately encouraging tens of billions of dollars of waste, fraud, and abuse in order to achieve a political objective is profoundly immoral. It’s a breach of faith with the hard-working taxpayers whose paychecks are being harnessed to a cause many of them don’t support.

A growing number of conservatives, like Chris Conover and Yuval Levin, are arguing that we should delay implementation of the law by a year, rather than endure this explosion of mishaps. The case for a one-year delay has grown much stronger this week.