Congresswoman: No plan to fight Obamacare subsidies fraud, security breaches

Patrick Howley Political Reporter
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The congresswoman leading the charge to ensure Obamacare security blasted Health and Human Services (HHS) Secretary Kathleen Sebelius’ plan to guard against fraud and security breaches of Obamacare’s subsidies program, which Sebelius was forced to design to help end the government shutdown.

Sebelius’ plan “prohibits Americans from knowing what their health care costs will be” and fails to provide a “privacy and security plan” to prevent fraud and abuse that could cost taxpayers nearly $250 billion, Tennessee Republican Rep. Diane Black wrote in a letter to Sebelius provided to The Daily Caller.

Obamacare is set to distribute more than $1 trillion in taxpayer-funded subsidies, and the program is now wide open to fraud and abuse that will only be enforced by the IRS on a case-by-case basis after it occurs. Nearly $250 billion of fraud and abuse could result in the form of improper subsidies being doled out, according to an estimate cited by Black.

Rep. Black fought to pass legislation to ensure that Obamacare subsidies are not given until the incomes of people receiving them are reviewed to determine their eligibility for the handouts. Black’s efforts resulted in House passage of her No Subsidies Without Verification Act in September. A watered-down version of that bill ended up passing into law when Congress and the White House agreed to a budget deal in October to end the government shutdown. The deal called for a strict income monitoring provision, which was seen as the sole Republican victory in the deal.

The provision only required HHS to submit a report to Congress by the end of 2013 laying out a plan to fulfill the income monitoring requirement. Sebelius quietly sent in her report on the last day of the year. But now, after reviewing Sebelius’ report, Black said that HHS is leaving the door open to confusion and fraud.

“Prior to the launch of the website, the nonpartisan Government Accountability Office and Treasury Department Inspector General released warnings that the income verification system for issuing exchange subsidies was not completed. In fact, the system was said to be vulnerable to fraud and abuse for a program estimated to issue nearly $250 billion of taxpayer funds,” Rep. Black wrote in a Jan. 10 letter to Sebelius.

The federal government will potentially hand out taxpayer subsidies to people committing fraud and the mistakes will only be “later reconciled,” meaning that a lengthy IRS process will target fraudsters after they already get their taxpayer handouts.

“For this reason, it is disappointing that the report states advance payments of the premium tax credit will be “later reconciled,” leaving one to understand that HHS will rely on estimates when calculating the cost of each subsidy. The lack of an up-front guarantee to consumers on the cost of the subsidy payment prohibits Americans from knowing what their health care costs will be,” Black wrote.

“It is troubling that this policy creates a scenario in which those receiving an overpayment may wind up owing the government an unknown amount of money. In the case that an underpayment is issued, the government would unfairly withhold an American’s income simply because an up-front guaranteed payment could not be determined by HHS,” Black wrote.

“With regard to verification in an eligible employer-sponsored plan, the report states that data from the Small Business Health Options Program (SHOP) are not available for verification. This again leads Americans to understand that HHS will continue to rely upon attestation on the part of consumers, leaving a back-log of verification processing once the data is made available,” Black wrote.

“Finally, given the lack of proper security measures taken to build the website, it is further disappointing that this report fails to mention any action taken to develop, test, enforce, and monitor a privacy and security plan,” Black added.

Black requested more information on implementation of the subsidies program from HHS within 30 days. HHS did not immediately return a request for comment from TheDC.

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