The Obama administration is making billions in payments to health insurers under Obamacare without calculating the exact amount companies are owed, according to a federal audit released Tuesday.
Obamacare’s premium subsidies are paid each month directly to insurance companies, to ease the burden of health coverage to eligible customers in the health law’s government exchanges. The payments add up: the federal government doled out almost $2.8 billion to insurers in just the first four months of 2014, when Obamacare launched.
The agency tasked with making the payments hasn’t yet made sure the calculations behind the billions are accurate. An inspector general audit of the Centers for Medicare and Medicaid Services has found that the administration did not confirm the exact amount it owed each insurer before paying up, putting the billions in federal taxpayer funds at risk.
The problem lies in HealthCare.gov’s unfinished back-end system. The portions of the website which allow insurers to communicate enrollee information with the federal government hasn’t yet been completed and was even less workable in 2014, when the outlays began.
“Because CMS has not developed the systems to obtain enrollment and payment information on an enrollee-by-enrollee basis, CMS cannot verify the accuracy of the nearly $2.8 billion it authorized for financial assistance payments during our audit period,” the Health and Human Services inspector general report concluded. “Without effective internal controls…a significant amount of Federal funds are at risk.”
That means sensitive information about the customers who are receiving the subsidies wasn’t up to date before CMS began to make the payments. Insurers instead estimated claims to the federal government, without exact data on the number of exchange enrollees and whether those customers were up-to-date on paying their portion of the premiums themselves.
The administration has said that HealthCare.gov’s back-end system went through a reboot before the start of the second open enrollment period, but still isn’t complete. Federal officials don’t expect the system to be fully finished until the end of 2015, according to The Wall Street Journal, potentially putting taxpayer dollars at risk for two years of Obamacare’s operation.
The audit examined only the first four months of 2014. The Congressional Budget Office estimates that federal spending on Obamacare subsidies will reach $726 billion between 2015 and 2024.
Premium subsidies are paid in advance to insurers as a form of tax credit for customers. Even once insurers are able to submit current customer information to the federal government, the accuracy of each customer’s subsidy is only verified once individual enrollees file tax returns each April. (RELATED: Obamacare ‘Clawback’ To Hit Some Subsidy Recipients With Huge Tax Bill)
CMS acting administrator Andy Slavitt said in a response to the audit that a series internal reviews was used to monitor accuracy and that the agency “takes the stewardship of tax dollars seriously.”
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