New Obamacare application is an invitation to fraud

Paperwork by Shutterstock.com

Article Highlights

  • The government’s new Obamacare form is going to be an invitation to fraud and abuse

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  • HHS fashioned a program so dense & intrusive that it was never going to be easy to rationalize the ensuing paperwork

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  • Now the Obama political team is faced with a stark choice: match the paperwork to the complexity or cut corners

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Last month, the Federal government floated a 61-page draft application that people would use to sign up for Obamacare’s financial subsidies.

After a political rebuke over the form’s length, the Department of Health and Human Services has released a streamlined, three-page version of the same application.

The rub? The government’s new form is going to be an invitation to fraud and abuse.

The length of the old application was largely driven by the need to ensure that consumers were actually eligible for the government subsidies that Obamacare offers as a way to offset the cost of buying health insurance.

Under the law, people are entitled to government money to defray those costs, depending on their historical income level. The subsidies start for families and individuals above 133 percent of the Federal Poverty Level (FPL) and then decline through rising income levels. The subsidies are no longer available once people reach 400 percent of the FPL. That comes out to about $95,000 in annual income for a family of four. (People below 133 percent of FPL will be offered Medicaid).

Those 61 pages of the old application were mostly filled with questions to make sure that people were eligible to get the subsidies. The government needs to verify their income, and make sure that they aren’t eligible for health insurance at work.

Under Obamacare, the government also needs to verify that people aren’t eligible for other public health insurance programs like Medicaid or Veteran’s benefits before they receive subsidies to buy coverage on the exchanges.

Is anyone in your household eligible to get health coverage from Medicare? Tricare? The Peace Corps? Are there any “other state or federal health benefit program” that they may be able to tap for health coverage? Is anyone in your household pregnant, and therefore eligible for other kinds of government assistance?

These were the kinds of questions that the old, long form asked. There were also a host of questions designed to ferret out income that might have been “misreported” on your tax return. The new form does away with all these questions, asking simply whether or not your enrolled in another government health program or are eligible for any supplemental income. Gone, also, are the questions designed to ferret out discrepancies in the income you report to the Internal Revenue Service, or whether you are ineligible for the subsidies because of other kinds of supplemental income.

The new form largely takes your word for it all.

This leaves one of three possibilities:

First, that the government is willing to tolerate a lot of fraud and waste as subsidies flow to individuals who weren’t eligible for the money in the first place.

Or the government is going to rely on the states and the private health plans to ask the probing questions, essentially foisting the vetting process onto other entities so that these actors (and not the Feds) are the targets of any political backlash.

Or third and most likely, it’s some combination of each of these devices.

The folks at HHS must be feeling that they’re darned if they do and darned if they don’t, now that they are taking flack for the 61 page form, as well as the shortened, 3 paged revision. But the conundrum is largely of their own design

They fashioned a health program so dense and intrusive that it was never going to be easy to rationalize the ensuing paperwork. Now the Obama political team is faced with a stark choice: match the paperwork to the complexity or cut corners.

Out of political expediency, they’ve decided to cut corners.

The downbeat story that they’ve temporarily suppressed over the application’s length sets up a bigger political backlash over the fraud and abuse that will follow.

 

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Scott
Gottlieb

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