Income-Verification Provision Won’t Disrupt Obamacare

A woman looks at the insurance exchange internet site October 1, 2013 in Washington, DC.
National Journal
Catherine Hollander
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Catherine Hollander
Oct. 17, 2013, 4:35 p.m.

The deal struck this week to re­open the gov­ern­ment and avert de­fault left the Af­ford­able Care Act mostly un­touched, with the single Obama­care pro­vi­sion that made it in­to the agree­ment un­likely to do much harm to the law.

The Health and Hu­man Ser­vices sec­ret­ary will now have to per­son­ally vouch to Con­gress that prop­er safe­guards are in place to in­sure sub­sidies for buy­ing health in­sur­ance go to only those who qual­i­fy. She’ll have to provide a re­port by Jan. 1 de­tail­ing how that will hap­pen, and with­in sev­en months the HHS in­spect­or gen­er­al’s of­fice will be re­quired to pro­duce its own re­port on how the veri­fic­a­tion sys­tems are work­ing.

Oth­er than adding a few more re­ports, the pro­vi­sion barely changes the Af­ford­able Care Act, and is a far cry from the delay, de­fund, or re­peal cries Re­pub­lic­ans soun­ded just weeks ago.

Un­der Obama­care, people earn­ing one to four times the fed­er­al poverty level can get a sub­sidy to help pay for the health in­sur­ance plans, which they’re now re­quired to hold. The in­sur­ance mar­ket­places, or ex­changes, opened for busi­ness — some suc­cess­fully, some not — on Oct. 1, and in­come-veri­fic­a­tion meas­ures are already in place.

The ex­changes com­pare ap­plic­ants’ re­por­ted in­come with IRS and So­cial Se­cur­ity data, as well as wage in­form­a­tion avail­able through Equifax, a cred­it-re­port­ing agency. If that doesn’t sub­stan­ti­ate what an ap­plic­ant says, the ex­change will ask for ad­di­tion­al in­form­a­tion or doc­u­ment­a­tion.

In Ju­ly, the ad­min­is­tra­tion an­nounced that in 16 states and Wash­ing­ton, which are run­ning their own ex­changes, they would make an ex­cep­tion for one year only. When an ap­plic­ants’ pro­jec­ted in­come is more than 10 per­cent be­low what the IRS or So­cial Se­cur­ity data in­dic­ate, and there’s no Equifax data to sup­port it, and the in­di­vidu­al can’t provide a reas­on­able ex­plan­a­tion for the change, states can choose not to audit them.

In­stead ““ in 2014 only ““ the state ex­changes have the op­tion of audit­ing a stat­ist­ic­ally sig­ni­fic­ant sample of this group rather than each mem­ber. Every­one ap­ply­ing for in­sur­ance would still be sub­ject to per­jury charges for ly­ing.

It wasn’t im­me­di­ately clear what the im­pact of Wed­nes­day’s agree­ment would be on HHS’s de­cision to grant states that re­prieve in 2014. Stat­ist­ic­al veri­fic­a­tion is used by the IRS to veri­fy claims, and the law did grant HHS flex­ib­il­ity in its im­ple­ment­a­tion timeline, so it’s not clear the Ju­ly de­cision would need to be changed.

HHS did not com­ment on the new pro­vi­sion.

Re­pub­lic­ans have long raised con­cerns that Obama­care will en­cour­age fraud, and the ad­min­is­tra­tion’s Ju­ly an­nounce­ment re­newed those cri­ti­cisms. “Re­mem­ber ‘li­ar loans,’ the low- or no-doc­u­ment­a­tion mort­gages that took bor­row­ers at their word without check­ing pay stubs or W-2s?” The Wall Street Journ­al ed­it­or­i­al board wrote at the time. “Obama­care is now on the same hon­or sys­tem, with tax­pay­ers in tow.”

The House GOP passed a bill last month that would tight­en veri­fic­a­tion pro­ced­ures by re­quir­ing the HHS in­spect­or gen­er­al to cer­ti­fy that a pro­gram to con­sist­ently and ac­cur­ately veri­fy in­come is in place be­fore HHS can provide any sub­sidies. That had the po­ten­tial to be ser­i­ously dis­rupt­ive, as Judy So­lomon, vice pres­id­ent for health at the left-lean­ing Cen­ter on Budget and Policy Pri­or­it­ies, poin­ted out: It wasn’t clear how the in­spect­or gen­er­al would audit something that did not yet ex­ist, so the sub­sidies could have been delayed.

“While the bill may sound in­noc­u­ous, it would ef­fect­ively blow up the op­er­a­tions of the new ex­changes by pre­vent­ing sub­sidies from start­ing on Janu­ary 1,” she wrote.

What ended up in the fi­nal agree­ment that law­makers passed on Wed­nes­day was sig­ni­fic­antly weak­er and un­likely to change the Af­ford­able Care Act’s im­ple­ment­a­tion. The re­ports may provide Re­pub­lic­ans an ad­di­tion­al chance to scru­tin­ize or cri­ti­cize, but it won’t stop the ACA train from pulling out of the sta­tion.

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