Washington, D.C. – Today, U.S. Senator Rob Portman (R-Ohio), the Chairman of the U.S. Senate Permanent Subcommittee on Investigations (PSI), announced that PSI is investigating mismanagement of the Affordable Care Act health care exchanges. Specifically, PSI is reviewing whether adequate verification procedures were in place to ensure that roughly $15 billion in insurance subsidies paid out last year reached the people who actually qualify. Portman expressed concern that reported breakdowns in the process for calculating subsidies have not only been unfair to some consumers who bought insurance through the exchanges but also put taxpayer dollars at risk.
“The Administration assured Congress that the eligibility verification process for the exchanges was working, but millions of Americans are now learning that they received overpayments that they have to repay. I’m concerned that the subsidy eligibility process is so complicated that many consumers believed they were receiving cheaper insurance coverage than they ultimately got. And further verification failures risk wasting billions in hard-earned tax dollars,” Portman said.
In January 2014, the Department of Health and Human Services (HHS) certified to Congress that the state and federal exchanges were capable of directing subsidies to qualified consumers and avoiding wasteful overpayments. But a number of independent reports suggest that the eligibility verification process has been broken from the start. The Inspector General of HHS reported early last year that the government was not prepared to resolve 89% of the millions of known inconsistences between information reported through the exchanges and other government databases. And in an undercover investigation, the Government Accountability Office (GAO) tried to obtain subsidies through the federal exchange using 12 different false identities and succeeded 11 times.
According to more recent reports, millions of Americans are now learning that they received subsidy overpayments — an unpleasant surprise at tax time. H&R Block reports that nearly two-thirds of tax filers who received subsidies through the exchanges received overpayments and, as result, will have their refunds cut or receive a bill from the Internal Revenue Service (IRS). And according to a survey by H&R Block, many taxpayers never understood they received subsidies through the exchanges in the first place, and “virtually everyone surveyed was confused about the tax credit reconciliation process.”
Additionally, in an April 27 report, the IRS’s independent watchdog raised concerns about the government’s ability to track Obamacare subsidy payments. The Treasury Inspector General for Tax Administration reported: “Because the IRS and the Department of Health and Human Services are responsible for the administration of the [Affordable Care Act subsidies], improper [subsidy] payments can result from weaknesses in either agency’s programs. As a result, the IRS cannot effectively assess the risk of [ACA subsidy] improper payments, estimate the improper payment rate and dollars, or establish corrective actions to address the causes of and reduce improper [Affordable Care Act subsidy] payments.”
In connection with this inquiry, Portman today sent a detailed letter to HHS Secretary Sylvia Mathews Burwell raising several important questions concerning the verification—including questions the Administration has failed to answer. PSI also issued a request for documents concerning the reported breakdowns in the verification process for state and federal exchanges so it could conduct its own review.