For months after the official launch date of the Affordable Care Act exchanges, the failures in the systems involved the near-impossibility of successfully enrolling in Obamacare health insurance coverage. Some of the state websites didn’t function well enough to even set up a user account, a feat most commercial websites mastered 20 years ago. Oregon’s exchange never signed up a single user; others, like the federal exchange, made the process so slow and unreliable that consumers didn’t know whether they had coverage until they had to use it.
To this day, the federal exchange still lacks the “back end” needed to determine how many sign-ups actually have coverage and are paying their premiums, leaving the number of successful enrollments a guessing game based more on surveys than hard data.
Now, however, the problem has expanded from failed enrollments to successful enrollments that shouldn’t have made it. The Government Accountability Office (GAO) conducted a small test of the Healthcare.gov site, which the Obama administration claims is functional now, to see whether the system could prevent fraudulent enrollments. In twelve attempts, the GAO succeeded in eleven fictitious enrollments.
Health and Human Services is still paying the bills for the fake accounts. NBC News reports the subsidy cost for the 11 approved applications is about $2,500 a month or about $30,000 a year. “For each of our 11 approved applications,” the report reveals, “we paid the required premiums to put policies into force, and are continuing to pay the premiums.
In half of their attempts, the GAO withheld needed information on the exchange and got stopped. They followed up with calls to the CMS contractor to get assistance, which should have required the investigators to submit identity documents. Instead, they got approved coverage over the phone, complete with taxpayer-supplied subsidies paid to the insurance companies.
Not that their efforts were entirely trouble free. Four of their fake applications got lost and had to be resubmitted, for a failure rate of one-third. That will sound familiar to those forced into the Obamacare exchanges. “According to CMS call-center and document-processing contractors,” the GAO reports, “multiple electronic applications have been common.”
In 10 of the cases, the Obamacare contractors requested follow-up documentation. GAO investigators only supplied all of the requested information in three of the applications, none at all for three, and partial submissions for four – and in two cases, submitted income data that contradicted their application. Decisions on eligibility are supposed to be made within 1-2 days, investigators were told; three months later, the policies are still in force, as are the subsidies.
What happened? The executives for the contractor processing the applications told GAO investigators that they don’t have the resources to determine documentary authenticity. Even if they did, executives said, “That is not the company’s business.”
Originally, the state exchanges and Healthcare.gov were supposed to connect with the IRS in order to perform all of these checks automatically. Congress envisioned a system that would combine taxpayer data and insurance company offerings for a one-stop enrollment and income verification system that would prevent fraud and abuse.
Critics warned that any system without that kind of integration would create confusion at tax time for consumers who made honest errors. Insurers who calculated their risk pools based on a particular level of subsidy payments would also risk their financial stability if the government had to claw back massive subsidy overpayments, and that the necessity of repayment would force future premiums even higher to compensate.
The Obama administration ignored those warnings. HHS had 42 months to build that system after the passage of the ACA in March 2010. Kathleen Sebelius had plenty of time to pursue that integration or determine whether it could get accomplished in time.
The IRS, as the enforcing agency for the mandates on individuals, employers, and insurers, certainly had to know whether HHS had access to taxpayer data in real time to make the system work as Congress required. And yet, despite White House promises that the exchanges would work as promised, everyone acted surprised when it failed in October – and continues to fail to this day.
That’s not the only promise broken by President Obama in the Obamacare debacle. For years, he promised that those who liked their plan could keep their plan, and those who liked their doctor could keep their doctor. At the same time HHS unveiled its deficient exchange system, millions of Americans had their existing policies canceled as insufficient for Obamacare’s coverage mandate, which HHS had already known would happen as early as April 2010. That earned Obama the 2013 Lie of the Year from Politifact.
The other half of that promise might earn Obama another, in two ways. Obama insisted that Obamacare would drive down premiums for a family of four by $2500 a year, but premiums escalated sharply instead, and are set to do so again for 2015. National Journal reported this week that doomsayer predictions about the 2015 escalations would prove incorrect, and that price hikes would be “less than 10 percent – nominal hikes in line with standard increases that have happened every year with or without Obamacare.” But the promise was that Obamacare would “bend the cost curve downward” and address the trend, not leave it undisturbed.
Insurance companies tried to limit premium increases with the only method left to them – narrowing the provider networks to control costs. That has led to rising anger among consumers who thought they would keep their existing doctors, as Obama promised, only to discover that their choices got significantly reduced.
The previous trend in premium increases came while leaving provider networks relatively wide, and if state and federal regulators force insurers to broaden them, those “nominal” increases will give way to a much sharper spike in premiums.
“People have to recognize it’s a trade-off, and I’m not sure they do yet,” Politico quotes one industry expert as saying. But Obamacare wasn’t sold as a trade-off. Obama and Democrats promised that nothing would change while everything was changing, and that government could deliver on all these promises if only we let Congress redesign the health-insurance market into America’s first-ever peacetime command economy.
There are lots of fakes involved in the Affordable Care Act system, and GAO’s phony accounts are the least of them.
Top Reads from The Fiscal Times: