GAO Created BOGUS Obamacare Accounts -- And Ended Up Getting Thousand$ In Subsidies

Obamacare continues to make headlines for its broken promises, ever-increasing premiums, and ever-decreasing list of providers. But has it made any progress on the enrollment "glitches" that plagued it early on? A new report by the non-partisan Government Accountability Office came to some damning conclusions on the Obamacare enrollment process, which allowed 9 out of 12 fictitious enrollees to get subsidized insurance.

The GAO created 12 completely fictitious accounts and tried to sign up during Obamacare's Special Enrollment Period (SEP), which is supposed to only be allowed after certain events, like losing minimum coverage or a divorce. Using bogus documentation, and at times no documentation at all, 9 of the 12 fake enrollees were able to secure insurance coverage and thousands in subsidies.

As the office explains in its new Obamacare enrollment testing report, Obamacare requires federal and state-based marketplaces to "verify application information—such as citizenship or immigration status—to determine eligibility for enrollment in a health plan, potentially including a subsidy." However, it does not include a "specific legal requirement" to verify the events that trigger an SEP. Though the Centers for Medicare & Medicaid Services (CMS) implemented a new policy requesting that supporting documentation be required to verify the SEP, the GAO's test found that the system has failed to adequately do so, as the success of 9 of their 12 fictitious accounts demonstrated:

The federal and selected state-based marketplaces approved health-insurance coverage and subsidies for 9 of 12 of GAO’s fictitious applications made during a 2016 SEP. The remaining 3 fictitious applicants were denied. The marketplaces instructed 6 of 12 applicants to provide supporting documentation, such as a copy of a recent marriage certificate, related to the SEP triggering event; the remaining 6 of 12 were not instructed to do so. For 5 applicants, GAO provided no documents to support the SEP triggering event, but coverage was approved anyway. Officials from the marketplaces explained that they do not require applicants to submit documentation to support certain SEP triggering events. For other SEP triggering events, CMS officials explained that the standard operating procedure in the federal Marketplace is to enroll applicants first, and verify documentation to support the SEP triggering event after enrollment. The officials also noted that all applicants must attest to their eligibility for enrollment.

The GAO explains that the subsidies secured by the fake, undocumented accounts "totaled about $1,580 on a monthly basis, or about $18,960 annually." The 9 fictitious applicants were also all approved for CSR subsidies, which means even more taxpayer dollars directed to subsidize their plans.

As John Sexton points out, the abysmal 75% failure rate is actually an improvement from the even more abysmal results of previous tests in 2014 and 2015, which resulted in 11 of 12 and 17 of 18 fictitious applicants getting insurance, respectively.

Below is the GAO's summary of its new Obamacare report:

The Patient Protection and Affordable Care Act (PPACA) requires that federal and state-based marketplaces verify application information—such as citizenship or immigration status—to determine eligibility for enrollment in a health plan, potentially including a subsidy. However, there is no specific legal requirement to verify the events that trigger a Special Enrollment Period (SEP), which is an opportunity period to allow an individual to apply for health coverage after events such as losing minimum essential coverage or getting married. Prior to the start of GAO’s enrollment tests, the Centers for Medicare & Medicaid Services (CMS), which maintains the federal Health Insurance Marketplace (Marketplace), implemented a policy to request that federal Marketplace applicants provide supporting documentation for certain SEP triggering events. According to CMS, ensuring that only qualified applicants enroll during an SEP is intended to prevent people from misusing the system to enroll in coverage only when they become sick. However, relying on self-attestation without verifying documents submitted to support an SEP triggering event, such as those mentioned above, could allow actual applicants to obtain subsidized coverage they would otherwise not qualify for.

The federal and selected state-based marketplaces approved health-insurance coverage and subsidies for 9 of 12 of GAO’s fictitious applications made during a 2016 SEP. The remaining 3 fictitious applicants were denied. The marketplaces instructed 6 of 12 applicants to provide supporting documentation, such as a copy of a recent marriage certificate, related to the SEP triggering event; the remaining 6 of 12 were not instructed to do so. For 5 applicants, GAO provided no documents to support the SEP triggering event, but coverage was approved anyway. Officials from the marketplaces explained that they do not require applicants to submit documentation to support certain SEP triggering events. For other SEP triggering events, CMS officials explained that the standard operating procedure in the federal Marketplace is to enroll applicants first, and verify documentation to support the SEP triggering event after enrollment. The officials also noted that all applicants must attest to their eligibility for enrollment.

GAO is not making any recommendations to the Department of Health and Human Services (HHS) in this report. However, GAO made eight recommendations to strengthen PPACA enrollment controls in a February 2016 report; these recommendations included conducting a fraud-risk assessment of the federal marketplace, consistent with the leading practices described in GAO’s framework for managing fraud risks in federal programs. In formal comments on a draft of the February report, HHS concurred with the recommendations and outlined a number of steps it planned to take to implement them. In an April 2016 follow-up letter to GAO, HHS described a number of specific actions it had taken in response to the eight recommendations, such as creating an integrated project team to perform the Marketplace fraud-risk assessment. As of November 2016, GAO considers all eight recommendations to be still open, pending corroborating information, and will continue to monitor CMS’s progress in implementing them. Implementing these recommendations by actions such as performing the fraud-risk assessment could help address the control vulnerabilities GAO identified during its most recent SEP tests.

H/T John Sexton

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