Federal investigators find ObamaCare has major vulnerabilities to fraud and overpayment

GAO finds more Obamacare fraud
GAO finds more Obamacare fraud

New investigations by the Government Accountability Office (GAO) have uncovered serious vulnerabilities to fraud and overpayments under Obamacare. As reported by the New York Times, the GAO’s investigators found that the government was making significant errors in determining people’s eligibility for coverage. As with so many things the government does, these errors led to spending more money – a lot more.

In some cases, the government was paying for unnecessary, duplicate coverage by providing subsidies for people to get private health insurance policies on the exchange even though they were already enrolled in Medicaid.

Even for those people who were just enrolled in Medicaid, overpayments were a widespread problem. When Obamacare expanded Medicaid to cover able-bodied working age adults, the law also provided that the federal government would cover 100 percent of the cost for the newly eligible people. For those who were previously eligible for Medicaid, the feds were supposed to cover an average of 57 percent of costs. What has ended up happening is that the categories are getting confused and the feds are paying the entire cost for some of the older accounts as well.

The states shouldn’t think they are off the hook if the feds are overpaying for Medicaid coverage. We’ve reported extensively on how the costs of Medicaid expansion borne by the states are far greater than estimated and are threatening to overwhelm many state budgets.

Carolyn L. Yocom, a director of health care studies at the GAO, confirmed the risk of overpayments when she testified before a House committee earlier this month. Even worse, the Centers for Medicare and Medicaid Services, which run the federal marketplace, lack adequate safeguards to prevent overpayments.

“The Centers for Medicare and Medicaid Services cannot identify erroneous expenditures due to incorrect eligibility determinations,” said Yocum. “The federal government could be paying twice — subsidizing exchange coverage and reimbursing states for Medicaid spending — for individuals enrolled in both types of coverage.”

Moreover, GAO investigators found, the Centers for Medicare and Medicaid Services, “does not have procedures to automatically terminate subsidized exchange coverage when individuals are determined eligible for Medicaid.”

In fact, it seems that the most basic efforts, like verifying Social Security Numbers, are not being taken. GAO investigators created eighteen fake identities, and all but one of them were approved for subsidized private health insurance or Medicaid coverage. The falsified information used for the fake applicants included “nonexistent Social Security numbers, invalid immigration document numbers, fictitious birth certificates and other counterfeit documents,” according to the Times.

In June of 2015, I reported on bogus re-enrollments found during another audit by the GAO. At that time, the chief of audits and investigations for the GAO, Seto Bagdoyan told the Senate Finance Committee that “HealthCare.gov does not appear to be set up to detect fraud,” and that “HealthCare.gov’s document-processing contractor ‘is not required to seek to detect fraud.’” Bagdoyan continued,

“The contractor personnel involved in the document-verification process are not trained as fraud experts and do not perform antifraud duties.”

Apparently not much has changed since then.

This rampant fraud and mismanagement is being reported on the eve of the new enrollment period for Americans to sign up for Obamacare coverage again. Starting November 1, people will be able to enroll in new coverage or change their existing plans.

With enrollment numbers still far below the Obama administration’s goals, millions of Americans still lack health insurance and are expected to attempt to sign up for coverage during this upcoming open enrollment period. I’m not optimistic that they will be able to fix these errors in the next few days, so once again, the federal government will be spending more than they promised while Americans remain frustrated with their increasingly expensive insurance policies.


Kristina Ribali is the Senior Coalitions Director for the Foundation for Government Accountability.  Follow Kristina on Twitter for the latest on Obamacare and other health care and welfare issues.

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