The Great Obamacare Enrollment Fraud

BY DOUG CARDELL Ph.D.. THE ECONOMIC ORACLE OF ORACLE:

A recent report from Paragon Health Institute, a nonpartisan, not-for-profit policy research institute, urgently discusses the significant increase in fraudulent enrollment in Obamacare ACA plans. The Biden administration’s increased subsidies and policy changes have driven this dramatic increase in fraud. The report proposes immediate measures to mitigate improper and fraudulent enrollments.

The original Affordable Care Act (ACA) created substantial subsidies for buying coverage in the exchanges. President Biden proposed and signed legislation increasing the subsidies until 2026. This increase fully subsidizes plans for those whose incomes fall between 100 percent and 150 percent of the federal poverty line. These enrollees are also eligible for a cost-sharing reduction program that increases plan value with lower deductibles and decreased oversight. Predictably, improved accessibility, higher value, and reduced oversight have dramatically increased fraud.

These policy changes have increased the incentives for the ethically challenged to underestimate their income to qualify for increased subsidies. This report compares the number of people who
claim to be eligible for subsidized coverage with the likely number of people who actually qualify. It also discusses how these policy changes incentivize brokers and insurers to engage in
fraud.

Since the elevated subsidies went into effect, the percentage of people enrolling who report qualifying income has ballooned. Nine states (Alabama, Florida, Georgia, Mississippi, North
Carolina, South Carolina, Tennessee, Texas, and Utah) have more enrollees reporting qualifying income than could actually exist. In Florida, for example, four times more sign-ups report
qualifying income than are found to meet the requirements.

While the amount of fraud varies from state to state, states that use HealthCare.gov reported an enrollment of 8.7 million while only 5.1 million of those likely to be eligible existed. That’s
about 70% more sign-ups than are qualified. This fraud is a severe problem in about half of the states, significantly impacting the healthcare system. This fraud is estimated to cost the taxpayers
fifteen to twenty billion dollars annually.

In theory, this fraud is paid back when the under-estimators file their taxes, but the Internal Revenue Service only takes back a fraction of the underpayment. If the fraudsters are in a non-
Medicaid-expansion state, these persons are not required to repay any of the underpayment.

While fraud is a problem in any venue, the federal government is particularly targeted for fraud since many fraudsters perceive it as a victimless crime and because the federal government is
noticeably less effective in policing fraud than the states and private concerns. This is born out by the fact that this fraud is more prevalent in states where the federal government administers
the ACA rather than the states.

The report concludes with recommendations to solve the problem.
Quoting from the report, they recommend six steps to reduce fraudulent exchange enrollment:
1. Congress should permit the enhanced subsidies to expire after 2025;
2. Congress should raise subsidy recapture limits to reduce incentives for people to misestimate their income;
3. Congress or the next administration should limit automatic re-enrollment into exchange plans and end it for people moving from or into fully taxpayer-subsidized plans;
4. Congress should appropriate cost-sharing reduction payments and prohibit silver-loading;
5. Congress should conduct aggressive oversight of the Biden administration’s management of HealthCare.gov, enhanced direct enrollment, and insurer and broker actions to take
advantage of misestimating income. Effective oversight is crucial in preventing and detecting fraudulent activities. Congress or the next administration should reverse policies
of the Biden administration that enabled such widespread fraudulent enrollment, particularly the continuous open-enrollment period for people who report they have
income below 150 percent FPL.
6. This failure is yet another reminder that federal programs are almost always too big to allow effective administration. This ineffective administration usually leads to fraud, waste, and abuse.
However, we continue the insanity of doing the same thing repeatedly and expecting better results. Smaller government is virtually always better government.