HealthCare.gov Re-enrolled Fraudulent Obamacare Accounts—and Gave Some of Them Bigger Subsidies

Government watchdog says Healthcare.gov has no fraud prevention system in place.



Here's how pathetically bad Obamacare's federal insurance exchange is at detecting fraud: 11 completely fake enrollees who were improperly granted subsidies last year in a damning and widely covered undercover investigation by the Government Accountability Office (GAO) were automatically re-enrolled again, according to an AP report. Some of them even got higher subsidies this year.

The system, in other words, allowed the fraud to happen—and then, even after the undercover op was revealed, mindlessly repeated the fraud again the following year.

The government watchdog reported last summer that it had created a dozen fraudulent accounts using fake names and made-up Social Security numbers. It was an undercover sting, but it didn't rely on any particularly clever scheme; GAO employees simply called in or got online and went through the normal application process using made-up information. Of the 12 attempts, 11 made it through the process. When the GAO released its report in July, 2014, the subsidies were still being issued.

They never got cut off. In fact, all 11 fraudulent accounts were re-enrolled by the system, according to an Associated Press report.

The AP obtained early access to a new GAO report and testimony scheduled for tomorrow, and reports that of those 11, six were "flagged and sent termination notices." But five of the six terminated accounts were reinstated after GAO officials pulled the nefarious and daring trick of…calling to ask for them to be reinstated (the sixth remains under review). The five reinstated accounts, the AP reports, "even got their monthly subsidies bumped up a bit, although GAO did not ask for it."

It is worth remembering that this is in direct contradiction of a promise made by the Obama administration that a working verification system was in place when Obamacare's big coverage provisions went into effect.

On January 1, 2014, the day that Obamacare's major coverage expansion provisions kicked in, former Health and Human Services Secretary Kathleen Sebelius sent a letter to President Obama formally certifying that Obamacare's health insurance exchanges "verify that applicants for advance payments of the premium tax credit and cost-sharing reductions are eligible for such payments and reductions" as required by the law. "When a consumer applies for insurance affordability programs, including advance payments of the premium tax credit and cost-sharing reductions, the Marketplace [the exchanges] verifies application information provided by the consumer," the letter stated.

Right. So that didn't happen at all.

It wasn't true last year, when Kathleen Sebelius certified that it was true, and it's clearly not true now, when the GAO's not-exactly-secret bogus accounts not only remain on the books but have been automatically reenrolled by a system that obviously makes little attempt to weed out fake accounts, even when the existence of those fake accounts has been revealed in a GAO report, a congressional hearing, and multiple major news articles.

After news of last year's GAO report, the administration said that "they were trying to address the problems," The New York Times reported. Judging by the GAO's latest, if any effort was made to correct these issues, it obviously wasn't very successful.

But it's not clear that any effort was made at all. "HealthCare.gov does not appear to be set up to detect fraud," according to the AP, which reports that GAO audits and investigations chief Seto Bagdoyan will say in congressional testimony that "HealthCare.gov's document-processing contractor "is not required to seek to detect fraud," and that "the contractor personnel involved in the document-verification process are not trained as fraud experts and do not perform antifraud duties."

It's not that the system doesn't work. It's that there's no system, period

This story tells you a lot about the shabby state of Obamacare, as well as the federal government's generally underwhelming efforts to prevent fraud in its major health care programs.

It also tells you how much the administration's word is worth when it comes to oversight of Obamacare. A senior administration official certified that a working subsidy eligibility verification system was in place when it obviously wasn't. Months later the administration said it would fix problems that a nonpartisan government investigation had revealed. A full year later, it's still very broken. Whether administration officials are intentionally lying or merely incompetent doesn't much matter; the point is that you can't trust them either way.