In light of the Government Accountability Office's eye-opening investigation into Obamacare's virtually nonexistent fraud protection safeguards, it's worth revisiting some recent history. Prior to last year's government shutdown, House Republicans passed a series of Obamacare-related bills over the adamant objections of most Democrats. One bill, called the 'No Subsidies Without Verification Act,' sailed through the House 235-191, with every single 'no' vote being furnished by Democrats. Only five members of President Obama's party backed this common-sense measure -- which, needless to say, died in Harry Reid's Senate. The impetus behind the legislation was the White House's announcement last summer that it would at least initially rely on the honor system in dispersing the law's subsidies to a subset of the population, wherein enrollees would self-report their income and insurance status. Administration officials had little choice but to pull this trigger, for two reasons: They'd already delayed the employer mandate (complicating the eligibility verification process), and the back end payment systems of Healthcare.gov weren't going to be completed on time (they are under construction to this day, and won't be ready until 2015). Conservatives decried the move as a reckless invitation to fraud and proposed mitigating solutions, resulting in the aforementioned legislation. As I mentioned earlier, 191 members of Nancy Pelosi's caucus voted to defeat anti-fraud protections that would have delayed the flow of taxpayer-funded subsidies until a basic verification regime was up and running. The White House immediately slapped the idea down:
Like dozens of other bills from the House meant to tweak or repeal ObamaCare, this one also seems likely to go nowhere in the Senate. The White House has said the bill is unnecessary, and President Obama would veto it if it were presented for his signature.
He never followed through on that threat because the bill never reached his desk. Flash forward to mid-October, when the partial government shutdown finally drew to a close. The GOP had been routed, and the only "concession" they won was a requirement that HHS Secretary Kathleen Sebelius certify that Obamacare subsidy eligibility verification procedures had been faithfully carried out prior to the awarding of subsidies. She did so in a letter to Vice President Biden dated January 1, 2014:
"I certify that the American Health Benefit Exchanges (Marketplaces) verify that applicants for advance payments of the premium tax credit and cost-sharing reductions are eligible for such payments and reductions, consistent with the requirements of section 1411 of the Patient Protection and Affordable Care Act…the Marketplace verifies application information provided by the consumer when making an eligibility determination. The Department of Health and Human Services has issued regulations that detail these procedures, and the Marketplaces have implemented numerous systems and processes to carry out these verifications."
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Seven months later, the GAO has revealed that "the federal marketplace approved coverage for 11 of our 12 fictitious applicants who initially applied online, or by telephone," with these fake applicants securing approval for $30,000 in taxpayer-funded annual subsidies. Beyond that, "as of July 17, two of the fake applicants were told their citizenship had been verified." The verification process, certified as adequate and thorough by the Obama administration, confirmed the citizenship of two non-existent people. One final background note: When critics of the "honor system" gambit raised their concerns, the administration dismissed the issue as impacting very few consumers, stating that the newly-granted "flexibility" regulations only applied to states running their own exchanges. The implication was that the federal exchange was all squared away. But the coverage approval for those 11 fictional enrollees all came through the federal marketplace, according to GAO.
House Democrats were irresponsible to vote against the 'No Subsidies Without Verification' Act. Senate Democrats were derelict in obstructing its passage by refusing to bring it to a vote. The White House was wrong to shrug the proposal off as "unnecessary." President Obama was myopic and foolish to threaten a veto. And Kathleen Sebelius was negligent in rubber-stamping a system that clearly was not up to the task. Taxpayers have every reason to worry how their hard-earned money is being dispensed through Obamacare, and genuine program enrollees -- who've turned over a great deal of sensitive information -- have every reason to wonder what other Healthcare.gov safeguards are woefully inadequate. I'll leave you with the GAO director declining to say whether he believes the Obama administration will have its act together before the next open enrollment period in November:
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