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Have Taxpayers Paid $11 Billion In Fraudulent Obamacare Tax Credits?


Fraud abounds as Obamacare grows Medicaid and issues tax-credit payments to insurers for consumers who might not have qualified for them.

Photo credit: Shutterstock.com

The Obama administration is still unable to track billions of dollars earmarked for the president’s signature health care law. We've seen waste, fraud, abuse and outright mismanagement of Obamacare and now, it gets worse.

"The Obama administration wasn’t able to ensure that all tax-credit payments made to insurers under the health law in 2014 were on behalf of consumers who had paid their premiums, according to a federal oversight agency."

The revelations come from a new report from the Health and Human Services’ Office of Inspector General released this week. The report's findings "raise questions about the oversight of tax-credit payments that went to insurers on behalf of consumers who qualified for financial assistance."

Photo credit: Shutterstock.com Photo credit: Shutterstock.com

Here is how the tax-credit payments should work: "After consumers sign up for coverage, they can choose to have the federal government distribute the tax-credit payments to insurers to lower their premiums."

However, the federal government wasn't actually able to ensure those were proper payments.

Almost $11 billion in tax-credits were paid to insurers in fiscal year 2014, who are part of the Obamacare care network. It seems that, "the Centers for Medicare and Medicaid Services, which oversees the health law, didn’t have an effective process in 2014 for ensuring that those tax-credit payments were accurately made only on behalf of enrollees—meaning the agency couldn’t verify the payments to insurers were only for consumers who had paid their premiums."

Now the question becomes, how much of that $11 billion came from improper payments for people who were not in fact qualified?

This is not the first time that we have seen problems with Obamacare's tax-credits.

"A July report by the Government Accountability Office found fictitious applicants on the federal exchange were able to fraudulently be approved for coverage and tax credits. A Health and Human Services inspector general report in August found that some consumers who got health coverage or subsidies on HealthCare.gov might not have been eligible to receive them in 2014 because of deficiencies in the federal exchange’s internal controls. Also in 2014, Republicans held congressional hearings on inaccurate subsidies"

In July, I reported that undercover federal investigators found that despite knowing there were serious problems with the verification process, defrauding Obamacare was still very easy. With a fake name and fake documents, the investigators were able to receive both insurance coverage and taxpayer subsidies, a year after they proved the first time that this fraud was achievable.

Last year we also learned that the IRS overpaid almost $350 million in Obamacare tax credits to some Americans. Internal Revenue Service Commissioner John Koskinen told Congress during testimony last year that nearly 400,000 Obamacare enrollees "estimated their incomes so badly last year that they ended up keeping money they didn’t deserve — to the tune of $345 million."

We also must not forget the Health and Humand Services report that found "the federal government cannot verify nearly $3 billion in subsidies distributed through Obamacare."

HHS discovered that the Centers for Medicare and Medicaid Services was not able to “ensure that financial assistance payments were made on behalf of confirmed enrollees and in the correct amounts,” and could not “prevent or detect any possible substantial errors,” in the subsidy payment process. They also had no system for the state-based Obamacare exchanges to “submit enrollee eligibility data for financial assistance payments.”

Unfortunately, as we’ve seen with Obamacare and the staggering waste and abuse that’s occurring within that program, ending fraud and misappropriated payments isn’t always easy. And the expansion of Medicaid under Obamacare has exacerbated the fraud in an already wasteful system. But states can do something immediately to alleviate much of the fraud happening in their Medicaid programs.

Several states have begun implementing an initiative referred to as “Stop the Scam” to clean up their Medicaid rolls. By using cutting edge data-matching technology to confirm the eligibility of welfare program enrollees, states can eliminate billions in fraudulent payments. The Stop the Scam initiative saved Pennsylvania taxpayers more than $300 million in its first year, and is saving Illinois taxpayers an estimated $350 million annually.

Those savings should be returned to the taxpayer, or applied to those who the programs were originally intended for - the truly needy - people like Jacob Chalkey. Jacob needs life saving seizure medication to survive, but the cost of Medicaid fraud in the state of Illinois led to the state cutting off payment for his medication.

In one year alone, audits that were authorized with bi-partisan approval found over 300,000 ineligible enrollees in their Medicaid system. Among these were 8,000 deceased still on the rolls. In the second year, the audit removed 400,000 ineligible enrollees . All totaled, ineligible enrollees were siphoning off an estimated $350 million in funds every single year.

Last year in Massachusetts, the state disenrolled over 200,000 ineligible recipients in just seven months from their Medicaid rolls, saving the state an estimated $250 million in taxpayer funds.

If all 50 states adopted this reform, taxpayers would save an estimated $8 billion annually.

During a recent interview, Christine Chalkey, Jacob’s mother and advocate for the developmentally disabled asked, “Why would you not want to save money, help the most vulnerable, and help society as a whole?”

Good question, Christine. And state lawmakers can accomplish all of that by focusing their attention on solutions to stop the waste, fraud and abuse happening in their Medicaid rolls.

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