Undercover GAO investigators secure health care tax credits using fake information

McClatchy Washington BureauJuly 23, 2014 

— - Government undercover investigators using fake identities were able to get premium tax credits to help pay for health coverage in 11 of 12 attempts after applying online and by phone through the federal health insurance marketplace.

The findings of the Government Accountability Office investigation were disclosed Wednesday at a House Ways and Means committee hearing that explored holes in the eligibility determination process for the Affordable Care Act's premium tax credits.

In a new report, the GAO said their undercover investigators were approved for tax credits that totaled about $30,000 a year, or a collective $2,500 per month toward monthly health insurance premiums for the 11 fictitious applicants.

While HealthCare.gov flagged many of the bogus online applications for a lack of information or misinformation, the investigators were still able to secure tax credits after completing the applications through telephone call center.

The cash from the tax credits went straight to insurance companies, making it unlikely that crooks could profit from similar fraud.

But the findings raise questions about about the thoroughness of the applicant vetting process and whether people who are supposed to be ineligible for subsidies could easily game the system.

"The question is whether the administration is being a good steward of taxpayer dollars and is putting in place adequate controls to protect those dollars from fraud, waste, and abuse. The history of the health care law's implementation suggests the answer is 'no,' " said Rep. Charles Boustany, R-La.

The application problems stem in part from an Obama administration policy that allowed consumers to self-report personal information about their incomes, citizenship, household size, all of which help determine their eligibility for tax credits.

The self-reporting system was adopted because the federal marketplace technology to verify all applicant information wasn't fully functional - and still isn't.

"While the Marketplace has several layers of safeguards in place to verify consumer data, including requiring consumers to submit accurate information to qualify for health coverage, we are examining this report carefully and will work with GAO to identify additional strategies to strengthen our verification processes,” said Aaron Albright, a spokesman for the U.S. Department of Health and Human Services.

The Obama administration is already contacting millions of Americans who signed up for marketplace health insurance about apparent discrepancies in the personal information they provided.

The activity involves about 1.2 million pieces of questionable information dealing with applicants’ personal income, 505,000 pieces related to immigration status and 461,000 others that deal with applicants' citizenship status.

But a government contractor working to clear up the inconsistencies told the GAO that 2.6 million inconsistencies were found in marketplace applications from people who had selected a plan. Only 650,000 of those inconsistencies have been resolved.

To read the GAO report, go to http://1.usa.gov/1od4K2g

Email: tpugh@mcclatchydc.com; Twitter: @TonyPughDC.

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