Health Care

GAO Launched an Obamacare Sting Operation—and Almost All Fake Insurance Applications Were Approved

The report suggests the health care law’s eligibility verification system isn’t working.

WASHINGTON, DC - APRIL 17: U.S. President Barack Obama delivers remarks about Obamacare and the ongoing tensions in Ukraine in the Brady Press Briefing Room at the White House April 17, 2014 in Washington, DC. Secretary of State John Kerry and his counterparts from Russia, Ukraine and the EU issued a joint statement today on the crisis in Ukraine calling for all illegal armed groups to be disarmed, all illegally seized buildings to be returned to their owners, and for all occupied public spaces to be vacated. (Photo by Chip Somodevilla/Getty Images)
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Sophie Novack
July 23, 2014, 4:51 a.m.

An un­der­cov­er op­er­a­tion found that the ma­jor­ity of fake Obama­care ap­plic­a­tions sub­mit­ted were ap­proved by the health law’s en­roll­ment sys­tem.

Fake ap­plic­ants were able to get sub­sid­ized in­sur­ance cov­er­age in 11 of 18 at­tempts, ac­cord­ing to a re­port from the non­par­tis­an Gov­ern­ment Ac­count­ab­il­ity Of­fice. The agency con­duc­ted the sting op­er­a­tion to test the strength of the Af­ford­able Care Act’s eli­gib­il­ity-veri­fic­a­tion sys­tem.

The find­ings will be dis­cussed at a House Ways and Means hear­ing Wed­nes­day. They were re­vealed in an ad­vance copy of the testi­mony from Seto Bag­doy­an, head of GAO’s Forensic Audits and In­vest­ig­at­ive Ser­vice, provided to the As­so­ci­ated Press.

The un­der­cov­er in­vest­ig­at­ors cre­ated fake iden­tit­ies by in­vent­ing So­cial Se­cur­ity num­bers, in­come, and cit­izen­ship, and by coun­ter­feit­ing doc­u­ments.

El­ev­en of 12 fake on­line or tele­phone ap­plic­a­tions were ap­proved, ac­cord­ing to Bag­doy­an. Five of six phone ap­plic­a­tions were suc­cess­ful, with the ex­cep­tion of one caller who de­clined to give a So­cial Se­cur­ity num­ber. Six on­line ap­plic­a­tions were ini­tially blocked by the veri­fic­a­tion sys­tem, but the in­vest­ig­at­ors were able to find a work­around by go­ing through the call cen­ter.

“The total amount of these cred­its for the 11 ap­proved ap­plic­a­tions is about $2,500 monthly or about $30,000 an­nu­ally,” Bag­doy­an said, ac­cord­ing to a re­port from NBC. “We also ob­tained cost-shar­ing re­duc­tion sub­sidies, ac­cord­ing to mar­ket­place rep­res­ent­at­ives, in at least nine of the 11 cases.”

The in­vest­ig­at­ors did not have the same luck with in-per­son as­sist­ors: They were un­able to get help in five of six cases, and the last was told by the as­sist­or that the in­come re­por­ted was too high for sub­sid­ized cov­er­age.

The ac­cur­acy of the health law’s eli­gib­il­ity veri­fic­a­tion sys­tem has been an on­go­ing con­cern among law­makers and of­fi­cials, and Re­pub­lic­ans have re­peatedly poin­ted to it as evid­ence that the law leaves the gov­ern­ment vul­ner­able to fraud.

The GAO in­vest­ig­a­tion was re­ques­ted by sev­er­al Re­pub­lic­an sen­at­ors and rep­res­ent­at­ives be­fore the in­sur­ance ex­changes launched in the fall, ac­cord­ing to The Wash­ing­ton Post.

The ad­min­is­tra­tion, mean­while, main­tains that it is work­ing to im­prove the pro­cess.

“We are ex­amin­ing this re­port care­fully and will work with GAO to identi­fy ad­di­tion­al strategies to strengthen our veri­fic­a­tion pro­cesses,” said ad­min­is­tra­tion spokes­man Aaron Al­bright.


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