Following the Administration’s release of Obamacare’s 2017 benchmark premium increases, Senate Finance Committee Chairman Orrin Hatch (R-Utah) and House Ways and Means Committee Chairman Kevin Brady (R-Texas) released a Majority Staff White Paper detailing a number of issues plaguing the law’s income eligibility verification process.
The process, which is used to both determine eligibility and repayment for taxpayer-funded subsidies, has come under scrutiny in more than a dozen reports from independent watchdogs. The white paper highlights these reports and details how the Obama Administration has failed to implement necessary safeguards and recommendations from these watchdogs to prevent fictitious applicants from receiving subsidies and wasting taxpayer dollars. The white paper also outlines how the Administration has failed to reconcile and reclaim excess subsidies, and has instead relaxed standards for income eligibility verification in the Federally-facilitated marketplace.
“As open enrollment nears, the Administration continues to be more focused on enrolling Americans in a failing health care system by relaxing the standards required to sign up for and receive federal subsidies, rather than protecting taxpayers,” Hatch and Brady said. “This white paper outlines some of the administrative shortcomings with Obamacare’s income verification and illustrates how the existing mechanism used to determine subsidies fails to protect the taxpayers who pay for it.”
A timeline of shortcomings identified by independent federal watchdogs with Obamacare’s federal marketplace can be found here.
Findings from the white paper include:
The Administration has not put necessary safeguards in place to protect federal taxpayer dollars during the Affordable Care Act (ACA) enrollment and income eligibility verification.
A recent Government Accountability Office (GAO) investigation created fictitious exchange applicants and found that these identities continued to receive APTCs despite failing to file a 2014 tax return by August 2016.
According to the Internal Revenue Service (IRS) data provided to GAO, as of December 2015, there were more than 1 million individuals who received nearly $4 billion in advanced premium tax credits (APTCs) in 2014 that have not been reconciled.
A Treasury Inspector General for Tax Administration (TIGTA) audit released in September 2016 revealed that nearly 1.6 million taxpayers received a total of approximately $2 billion in excess APTCs on their tax returns in 2014. Due to repayment restrictions in the ACA, TIGTA estimates that the IRS is prevented from collecting $680 million of the excess APTCs received by a subset of those taxpayers.
For the 2017 plan year, the Centers for Medicare & Medicaid Services (CMS) increased the data matching threshold that generates an inconsistency based on discrepancies between reported income and verifiable income available from federal, state, or commercial sources. This makes it more likely individuals could receive APTCs in greater amounts than for which they otherwise would be eligible.