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In Test, Government Inspectors Were EASILY Able To Defraud Obamacare

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Dustin Siggins Contributor

Republicans are calling the Obama administration to task after a government watchdog easily duped the Affordable Care Act (ACA) anti-fraud protections 96 percent of the time.

Last week, the Government Accountability Office (GAO) reported on its 2015 and 2016 tests to see how stringent the ACA’s taxpayer protections are for both subsidies and Medicaid expansion. The results were less than satisfactory, the GAO’s Director of Forensic Audits and Investigative Service told The Daily Caller.

“I think the point I’ve made in the past is that these are significant vulnerabilities in the process itself, and the checks and controls,” Seto Bagdoyan, who will testify Wenesday to a joint hearing of two subcommittees of the House Energy & Commerce Committee, explained. “We were able to overcome them, using the system’s own instructions.”

One set of instructions told GAO’s investigators to contact a representative by phone to gain insurance coverage. According to Bagdoyan, “We were able to talk our way into getting coverage and subsidies by engaging in a conversation with a representative on the other end of the phone. And this was consistent, year on year on year.”

Bagdoyan will be joined at the hearing by the Acting Administrator for the Centers for Medicare and Medicaid Services and the Deputy Inspector General for Audit Services in the Department of Health and Human Services.

Starting in 2014, the GAO attempted 45 false applications for various exchanges across the country during enrollment periods, including both state and federally-run exchanges. Forty-three of those applications were accepted, a 95.6 percent success rate.

In 2015, “fictitious applications for subsidized health plans” were used 10 times, according to the GAO report for that year. Medicaid coverage was approved in seven out of eight fake applications. Four states – New Jersey, North Dakota, California, and Kentucky – were targeted.

The 2016 investigation included four applications out of the eight submitted that were follow-ups from prior years. West Virginia and Virginia federal-run exchanges failed in this examination, as did California’s state-run exchange.

The most recent investigation included applications that included non-existent Social Security numbers. One included a fake immigration card, and in four cases GAO investigators gained subsidized health insurance by falsely claiming they were turned down for Medicaid coverage.

Of the 43 accepted applications, three were eventually rejected when GAO did not provide necessary follow-up paperwork. For the two applications that were not accepted, Bagdoyan told TheDC, “that was by design, when we refused to provide Social Security numbers, citing privacy concerns.”

There was little difference between state and federal exchanges in terms of accountability and oversight, according to Bagdoyan. “Our scenarios throughout all three cycles of testing really didn’t encounter an enormous amount of resistance.”

Neither GAO report nor Bagdoyan would attribute a dollar value to how much taxpayers could lose to the fraud exposed from 2014 to 2016. However, the GAO did note that the Congressional Budget Office projected nearly $866 billion in subsidy spending under the ACA between 2017 and 2026, a number Bagdoyan mentioned.

“In our view, as a matter of program integrity, the ACA is inherently vulnerable to fraud. That is a point I will make…during my oral remarks, and I have made them in the past,” Bagdoyan said, adding that “given the inherent riskiness, some portion of that could be at risk at some time.”

ACA fraud has long been a concern of fiscal conservatives. Earlier this year, The Mercatus Center’s Brian Blase discovered that Medicaid expansion costs were 50 percent higher than anticipated in 2015. Medicaid lost about 10 percent of its budget – just over $29 billion – to improper payments last year, and possibly more to fraud.

The entire federal government officially reported losing $136 billion to improper payments in 2015, though the actual number of taxpayer dollars lost is likely much higher. More than three-quarters of the $136 billion came from Medicare, Medicaid and the Earned Income Tax Credit.

“This is my personal view, based on the work we’ve done – [Medicaid] is a major benefits program, with an enormous budget. It is inherently risky. If the risk needle moves at all with expansion, it makes it bigger, so if you do the math, there is probably more risk involved, in that regard,” said Bagdoyan, who clarified that he was merely offering “ a very top-line supposition.”