Federal Obamacare Exchange Unable to Verify 2.6 Million ‘Inconsistencies’

By Barbara Hollingsworth | July 28, 2014 | 4:21 PM EDT

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(CNSNews.com) – The U.S. government cannot verify 2.6 million eligibility requirements submitted by some of the eight million people who have signed up for health insurance subsidies on the Obamacare federal exchange, according to a report by the Department of Health and Human Services’ (HHS) inspector general (IG).

(See HHS IG report.pdf)

“The Federal marketplace was unable to resolve 2.6 million of 2.9 million inconsistencies because the Centers for Medicare & Medicaid Services’ (CMS) eligibility system was not fully operational,” the 32-page IG report stated.

The “inconsistencies” were found on applications submitted to the federal exchange under the Affordable Care Act between Oct. 1, 2013 and the end of February 2014, the IG reported.

An applicant accessing the “one-stop” Healthcare.gov federal exchange website “must submit and attest to information such as Social Security number, income, citizenship status, and number of dependents” under penalty of perjury.

By law, this information is supposed to be verified through the Federal Data Hub, which links HHS with the Internal Revenue Service, the Social Security Administration, and the Department of Homeland Security.

The data hub was designed to “reduce costs and improve reliability by organizing a single set of interfaces that would otherwise require multiple point-to-point interfaces and redundancies,” according to the IBM Center for the Business of Government.

“If the marketplace is able to verify the applicant’s eligibility through the Data Hub or with other data sources, the applicant can select a QHP (qualified health plan),” the IG report explained.

However, “in some circumstances, the marketplace cannot verify an applicant’s information through available data sources. When this happens, it is referred to as an inconsistency.” The IG noted that “each applicant can have more than one inconsistency.”

Of the 2,611,780 “inconsistencies” in applicant-provided information that could not be verified by the federal exchange, 44 percent concerned citizenship status, 33 percent were about a lack of income verification, and 12 percent were about whether the applicant’s employer provided minimum essential health insurance coverage, the report noted.

The fewest inconsistencies had to do with whether the applicant was incarcerated or of Native American descent.

Under federal regulations, applicants who submit information that cannot be verified are supposed to be notified within 90 days to allow them to submit the appropriate documents, such as a birth certificate, bank statement or pay stub, to resolve the problem.

But the federal exchange does not have the resources to review such evidence of eligibility, the IG pointed out. “The Federal marketplace sent notices to applicants requesting additional documents to resolve inconsistencies, but reported that it lacked the system capability to process these documents and resolve inconsistencies,” the IG noted.

As a result, “the Federal marketplace reported that it had actually resolved only about 10,000 such inconsistencies, or less than one percent of the total,” the report stated.

CMS responded by noting that “an inconsistency between the eligibility information provided by an application filer and the electronic data sources does not mean that the information provided by the application filer is incorrect or that the applicant is ineligible.”

But Twila Brase, co-founder of the Citizens Council for Health Freedom (CCHF), told CNSNews.com that the IG report indicates that the federal government may be paying premium subsidies for a “significant number” of Obamacare enrollees even though it cannot verify their eligibility.

What it really says is "that they have a system that cannot prevent fraud, does not prevent people who are not eligible from signing up, and now will require significant amounts of taxpayer dollars just to see who is actually eligible,” Brase told CNSNews.com.

“And then of course, we have no idea if they’ve already given out those premiums, and how many of those premiums, which are taxpayer dollars, that we’re going to get back if they were inappropriately provided because these people aren’t actually eligible for them.”

Brase added that the federal government knew all along that there would be a problem with verification even before the federal exchange opened last fall.

“They admitted that the entire eligibility and financial accountability systems were not up and running. They had to assure the health plans that they would pay for the people who had signed up,” Brase said.

“They couldn’t check eligibility, so they agreed to do it blind. In the meantime, they’re paying their subsidies,” she added.

“Long before that October 1 deadline, they knew that they didn’t have the accountability and eligibility system even created when they started enrollment. So that to me is an egregious violation of the public’s trust for use of taxpayer dollars because what that says is that the government has no way to know whether the people who are enrolling are actually eligible for the taxpayers’ dollars,” she said.

“And that’s a system that nobody can trust. That’s a system that’s flying in the dark,” she added.

“And there’s a lot of money at stake. I mean, the premium subsidies are huge. These are taxpayer' dollars and the government is just giving them out without a clue whether these individuals are qualified to receive them."

“The real question now is what happens to these 2.9 million folks? Does the government let them continue to get coverage while they try and figure out the discrepancies? Do they have enough staff to figure out the discrepancies?” Brase asked.

She pointed out that the next open enrollment begins on November 15th, adding that “it’s pretty clear that the Obama administration does not want to decrease their eight million enrollment number” by declaring that those without proper documentation are ineligible for government subsidies.

“Politically it’s probably not anything they want to do, but to follow the law and to have integrity with the taxpayer, they should just tell all these people that they don’t get subsidies until all these inconsistencies are solved,” Brase told CNSNews.com.