California Insurance Commissioner on Obamacare Enrollment Counselors: "We can have a real disaster on our hands."


credit: brianwallace / Foter / CC BY-NC

The announcement earlier this month that state-run health exchanges under Obamacare will not be required to independently verify an individual's income or insurance status has already opened up the health law to the risk of fraud and improper subsidy payments.

And now insurance officials in California see another fraud risk associated with enrollment in the law in the lack of controls on the enrollment counselors the state is planning to hire. The AP reports that the state's insurance commissioner is warning that the lax requirements for would-be sign-up assisters could open the door to identity theft and fraud:

The exchange, known as Covered California, recently adopted rules for a network of more than 21,000 enrollment counselors who will provide consumers with in-person assistance as part of the federal Affordable Care Act. In some cases, they will have access to personal and financial information, from ID cards to medical histories.

But the state insurance commissioner and anti-fraud groups say the exchange is falling short in ensuring that the people hired as counselors are adequately screened and monitored.

Insurance Commissioner Dave Jones also said the exchange does not have a plan for investigating any complaints that might arise once the counselors start work. That means consumers who might fall prey to bogus health care products, identity theft and other abuses will have a hard time seeking justice if unscrupulous counselors get ahold of their Social Security number, bank accounts, health records or other private information, he said.

"We can have a real disaster on our hands," Jones, a Democrat, said in an interview.

To some extent, this is just an industry turf war. Health insurance agents and brokers are worried about enrollment counselors moving into their space, and would prefer for navigators to face greater scrutiny. But the fraud concerns are not completely without merit. Because Obamacare's legions of enrollment assisters will be tasked with helping people sign up for insurance under the law, they will in many cases have to be able to access sensitive personal information—income, medical records, perhaps even Social Security numbers. That creates the potential for abuse by people who are being paid by the government to help boost Obamacare's enrollment.

There's a bigger related issue here, though, and that's whether it is legal to pay for these enrollment counselors using federal exchange grants, as California is doing. 

Obamacare sets up a "navigator" program that employs people to help assist with enrolling in the law. But the law also says that states running their own exchanges—like California—can't use federal exchange grants to pay for navigators. But that's what California wanted to do, so the state and the Obama administration agreed on a neat little trick: They decided not to call the folks working for their enrollment assistance program "navigators." But it's pretty clearly a navigator program in all but name, and California is using federal exchange grant money to fund it.

Congressional Republicans have raised questions about this, to little effect. It's potentially a big issue, though, given the cost (California has received $910 million in federal exchange funding) and the importance of enrollment, especially in California, to the overall Obamacare scheme It's also another example of how the administration has taken to ignoring the parts of the law that it finds inconvenient.