The program fails to verify enrollees’ reported income, enabling fraud.
Jim Geraghty posted about a recent Government Accountability Office (GAO) report that revealed that the Affordable Care Act marketplace plans are highly susceptible to fraud, as the government paid out health insurance subsidies to 23 out of 24 fake enrollees that the GAO completely made up. As the Paragon Health Institute summarizes, all fictitious enrollees “used invalid information, such as fake Social Security numbers, unverifiable identities, and income claims that would normally require documentation.” Thousands of dollars in subsidies per year flowed to each of them.
The only good news is that the GAO did not have to commit actual identity theft to test HealthCare.gov’s anti-fraud measures, which, it turns out, are woefully insufficient following Biden-era moves to loosen enrollment procedures.
The report also found that tens of thousands of Social Security numbers are being used multiple times in a year to purchase subsidized health coverage: “GAO’s preliminary analyses identified over 29,000 SSNs in plan year 2023 and nearly 68,000 SSNs in plan year 2024 used to receive more than one year’s worth of insurance coverage with APTC in a single plan year.”
It goes on to say that Health Department officials “explained that the federal Marketplace does not prohibit multiple enrollments per SSN to help ensure that the actual SSN-holder can enroll in insurance coverage in cases of identity theft or data entry errors.” Okay, but what if the “multiple enrollments per SSN” are in fact instances of identity theft? Does that possibility not seem more likely?
There is an even bigger problem with ACA subsidies than fictitious enrollees, however. GAO’s analysis shows that the program is doing a terrible job of reconciling enrollees’ income claims with their tax returns. You know, that part where the program is supposed to verify enrollees’ reported incomes?
The size of the premium tax credit that enrollees receive is supposed to be directly related to their income, with lower-income enrollees getting much higher subsidies to cover the cost of their health insurance. If incomes aren’t being verified, however, people with higher incomes can simply claim that they’re poorer than they are and get taxpayers to pick up a much larger chunk of their insurance bill. There is no incentive for someone to overreport his or her income — as that would result in a smaller premium subsidy — but there is a huge financial incentive to underreport it.
From the report:
GAO’s preliminary analysis of data from tax year 2023 could not identify evidence of reconciliation for over $21 billion in [Advance Premium Tax Credit] for enrollees who provided SSNs to the federal Marketplace for plan year 2023. Unreconciled APTC may not necessarily represent overpayments, as enrollees who did not reconcile may have been eligible for the subsidy. However, it may include overpayments for enrollees who were not eligible for APTC.
So, at least $21 billion per year in federal money is flowing to enrollees based on incomes that may or may not be accurate. Worse still, the Paragon Institute notes that this was largely a deliberate choice by policymakers under President Biden:
The oversight failure is compounded by CMS’s decision to pause enforcement of reconciliation for multiple years. GAO writes that CMS “did not act on IRS data for consumers who did not file tax returns and reconcile prior APTC for plan years 2021 through 2024.”
This means that for at least four consecutive coverage years, individuals who received subsidies but never filed taxes were allowed to continue receiving subsidies without personal consequences. The statutory safeguard intended to prevent improper payments was abandoned during the entire Biden administration.
If congressional Republicans needed yet another reason not to extend the enhanced ACA subsidies this month at a ten-year cost of $350 billion, this damning report should do the trick.