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Fake applicants got Obamacare subsidies, watchdog says

By Laurie Ure, CNN Congressional Producer
updated 6:45 PM EDT, Wed July 23, 2014
  • Government Accountability Office set up fictitious applicants for health care plans
  • Eleven people were able to obtained subsidized insurance coverage under Obamacare
  • The matter came before Congress at a hearing on Wednesday

(CNN) -- Nearly a dozen fake applicants were able to obtain coverage subsidies under Obamacare during undercover testing of enrollment controls, a government watchdog said.

The Government Accountability Office, the investigative arm of Congress, created 18 fictitious applicants to test the Affordable Care Act's "front-end" controls for verifying an applicant's identity or citizenship status.

In 12 cases, the "applicants" applied online or by telephone. Eleven obtained subsidized coverage. One was denied because the "applicant" did not provide a Social Security number-- omitted purposely as part of the test.

Six other fake applicants used, or tried to use, in-person assistance. Five were unable to obtain such help, and the sixth was correctly told that the applicant's stated income would not qualify for a subsidy.

The chairman of the House Ways and Means Committee's subcommittee on oversight, which commissioned the GAO study, presided over a hearing Wednesday on the test's results.

"Sadly, this should not be terribly surprising," said Rep. Charles Boustany, a Louisiana Republican.

"The question is whether the (Obama) 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," Boustany said.

As of Wednesday, coverage remains in effect for all 11 approved applications, according to the GAO's investigations director Seto Bagdoyan.

The ACA provides subsidies through the marketplace to eligible applicants, at significant cost to taxpayers.

According to the Congressional Budget Office, the estimated net cost of coverage provisions to the federal government is $36 billion for fiscal year 2014, and $1.4 trillion for fiscal years 2015 through 2024-- with subsidies accounting for most of the cost.

Knowingly providing false information is a violation of federal law, subject to a $25,000 fine.

The Centers for Medicare and Medicaid Services oversees online marketplaces, which are in turn required to take several steps to verify application information.

In a statement, CMS spokesman Aaron Albright said "the steps we take to ensure that individuals and families get the premium support and coverage they deserve, and that no one receives a benefit they shouldn't, are ongoing and have not concluded."

Albright said the health exchange marketplace has "several layers of safeguards" to verify applicant information, including a requirement that consumers submit accurate information when applying for health coverage.

But he said that CMS is nonetheless "examining this report carefully and will work with GAO to identify additional strategies to strengthen our verification processes."

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