ObamaCare Is a Mecca for Fraud
This is a Wall Street Journal Opinion Piece.
Federal auditors at the Government Accountability Office show how easy it is for the ineligible to sign up.
The recent Minnesota Medicaid grift illustrates how open-ended government welfare can easily become an inducement for fraud. A new Government Accountability Office report finds the pandemic-era sweetened ObamaCare subsidies are also ripe for gaming.
The GAO last fall began an undercover test in which it submitted insurance applications for fictitious individuals to the federal ObamaCare exchange and insurance brokers. Nearly all of its invented people were able to enroll in subsidized plans despite submitting false or no records to verify their identities and incomes.
Of GAO’s 24 applications, 23 were approved. Eighteen enrollees were still covered as of September, suggesting that the exchange and insurers didn’t verify information even after enrollment. The subsidies paid to insurance companies for those 18 applicants totaled more than $10,000 per month, equivalent to a $6,700 annual subsidy for each enrollee.
GAO says in some cases, “we were not prompted to provide documentation” to verify an applicant’s identity. No Social Security number? No problem. In another instance, the ObamaCare exchange “notified us that it had verified the applicant’s estimated income based on documentation we submitted. However, we did not submit documentation.”
In two cases, brokers called the ObamaCare help center because applicants had submitted invalid Social Security numbers. The center let brokers submit the fraudulent applications anyway. This suggests the Centers for Medicare and Medicaid Services, which runs the federal ObamaCare exchange, was ignoring fraud.
GAO also analyzed enrollment data in 2023 and 2024 for data anomalies. It found more than 29,000 Social Security numbers in 2023 and nearly 68,000 in 2024 that were used to receive more than one year’s worth of insurance coverage with subsidies in a single year, meaning the same Social Security number was used by more than one person.
In 2023, one Social Security number was used to apply for more than 125 policies. Perhaps this was identity theft, but it’s also possible that brokers submitted fake Social Security numbers to enroll ineligible or phantom people in plans. Brokers earn more in commissions from insurers if they enroll more people in ObamaCare.
The Justice Department has charged numerous brokers with enrolling people in ObamaCare plans, or switching them to new plans, without their consent. GAO identified at least 30,000 applications in 2023 and 160,000 in 2024 that had “likely unauthorized changes by agents or brokers.”
GAO also found that incomes weren’t later verified for enrollees who received $21 billion in subsidies in 2023. That means they might have received bigger subsidies than they were eligible for. The Paragon Health Institute’s Brian Blase has warned that ObamaCare’s lax verification controls encourage people to understate income to get bigger subsidies.
Using Census Bureau data, Mr. Blase estimates that about 6.4 million people this year were improperly enrolled in subsidized ObamaCare plans, costing taxpayers $27 billion. He has also found that about 40% of enrollees in fully government-subsidized plans filed no medical claims. GAO’s report suggests many may not be real people. Others may have employer coverage and been enrolled by brokers without their knowledge.
This year’s GOP tax bill included modest reforms to prevent ObamaCare fraud, such as requiring the exchange to verify Social Security numbers and income data before enrolling applicants in plans. It also requires people to repay the government if their incomes turn out to be higher than what they estimated on their applications. The Congressional Budget Office projected that the tax bill’s ObamaCare fraud controls could result in about one million more people going uninsured, but most aren’t eligible for subsidies—and some might not even exist.
Democrats want to boost enrollment in ObamaCare no matter the cost because they view the subsidized and regulated plans as a way-station to a single-payer system. Senate Minority Leader Chuck Schumer plans to tee up a vote this week to extend the pandemic-era subsidies, which have been an inducement for fraud.
Republicans would be wise to remind voters that Democrats sold ObamaCare on false pretenses—e.g., it would make healthcare “affordable.” Extending the subsidies would perpetuate that fraud.
