Analyst: Obamacare Proposals Place Taxpayer Funds at Risk

Thursday, 10 Jul 2014 12:54 PM

By Jennifer G. Hickey

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Recent proposals by the Department of Health and Human Services (HHS) to streamline the process used to determine eligibility for Obamacare subsidies allow inconsistencies to persist, thereby placing taxpayer funds at risk, a healthcare analyst at a conservative think tank argues.

In a Wall Street Journal blog post, Chris Jacobs of America Next, says two HHS proposals related to how re-eligibility for insurance subsidies is determined "could allow many income-related inconsistencies to persist in 2015 – potentially risking taxpayer funds."

Under the proposed changes, HHS would use only Internal Revenue Service (IRS) data to determine who qualifies for subsidies, rather than the multiple sources currently used. Secondly, if an individual fails to update their information, HHS would simply keep their subsidies at the same level.

The problem, Jacobs contends, is that neither proposed rules address the data discrepancies highlighted in a recent HHS Office of Inspector General (OIG) report.

In the July 2 report, the inspector general said the Obama administration had failed to resolve a majority of the discrepancies identified in the federal insurance exchange program even if the applicant submitted appropriate documentation.

According to the report, of the total 2.9 million inconsistencies found from October to December 2013, HHS was unable to correct 2.6 million problems. Furthermore, of the nearly 330,000 instances in which corrections could be made, the administration had only actually resolved less than 1 percent.

"The federal marketplace was generally incapable of resolving most inconsistencies," stated the report, which requested the Obama administration to publicly explain its proposed plans to address data problems in the 36 states operating new insurance markets.

Most inconsistencies related to citizenship and income, the first and most basic qualification criteria.

"With 1 million — and probably many more — applications containing inconsistencies over income, further liberalizing the subsidy eligibility criteria could create more problems. At best, individuals with inconsistencies that persist could eventually be forced to repay excess subsidies for 2014 and 2015. At worst, taxpayers could be on the hook for significant amounts of improperly paid subsidies," Jacobs concludes.

The IG report drew a quick and stern response from members of Congress, including Senate Finance Committee ranking member Sen. Orrin Hatch.

"When Obamacare was passed, its chief architects told us they would have to pass the bill to find out what was in it. Today's report confirms what we knew was not included: safeguards to protect hard-earned taxpayer dollars from an incompetent bureaucracy. As today’s report shows, the federal marketplace was not able to resolve 2.6 [million] of 2.9 million data inconsistencies. A nearly 90 percent failure rate is absolutely preposterous and disgraceful," Hatch said in a statement after the report was issued.

The Center for Medicare and Medicaid Services (CMS) concurred with most of the IG's recommendations, but did attempt to assign partial blame for the discrepancies on consumers inexperienced with the enrollment process.

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