The federal government doesn't know how much of the $24 billion given to people in the form of premium tax credits to buy health insurance was improperly paid and the Government Accountability Office says HHS won't have an estimate until 2022.
The report does not call into question the process for making sure that applicants are legal immigrants or citizens, but there are ways to game the system on almost every other front—such as lying about where you live, saying you don't have access to affordable employer-based coverage, or through identity theft.
The GAO said HHS needs to expedite reports of improper payments and improve verification of customer-reported information. It also recommended that the Internal Revenue Service improve its verification processes.
The agencies partly agreed with the recommendations but noted that some information is nearly impossible to verify, such as a change in family size.
Verifying residence has become an issue in opiate treatment fraud. Addicts claim to live in another state and apply for a policy in the individual market there. Treatment centers fund the monthly premiums because reimbursement is higher from private plans, especially in certain markets, than it is from Medicaid.
"CMS officials told us that they were unaware of a comprehensive, national electronic data source that could be used to verify residence," the report stated.
Similarly, the insurance exchanges only have access to data about people who are covered by government insurance or by federal employers, not state and private employers. The Affordable Care Act does not require that employers report information about the health insurance they offer to employees.
The GAO said the CMS has explored other possible data sources, including the National Directory of New Hires and Equifax, but those sources have not had sufficient current and accurate information.
Even when the agencies can identify overpayments or ineligible recipients, they are not able to recoup all of the payments, the report noted.
The IRS can withhold part or all of a tax refund if someone ended up getting a tax credit by mistake. However, federal law limits that amount for people who earn less than 400% of the poverty level. For those who earn less than 200% of poverty, the limit is just $300 or $600 for a family.
In 2016, even after the IRS retrieved some of that money, overpayments still totaled $800 million.
It estimated that as of May 2016, the CMS had paid about $19 million in advance premium tax credits to insurance companies for people who didn't prove they were legal immigrants or citizens but had applied during open enrollment. The GAO said that the government should notify insurers on a rolling basis, but the CMS said its way aligns with issuer operations and is more efficient.
The report estimated that the government paid $10 million in advance premium tax credits for people who were incarcerated while receiving the credits, or to people who used the name of a prisoner to apply. But the CMS replied that the prisoner database is unreliable and generates too many false positives. The Social Security Administration is working on improving the database, but the CMS could not say when it will be done assessing if the improvements are adequate to use it for this purpose.
The CMS can't even check to see if someone is inflating their income on the application. That would usually not be advantageous to applicants, as they would receive lower subsidies, but in states that refused the Medicaid expansion, it would be the only way to get help for some adults below the poverty line.
The GAO said it tested 93 applications to see if they had inconsistencies and in 11 cases in states that did not expand Medicaid, the individuals lived in a household that had earned less than the poverty level the previous year.
The CMS noted that people's income can fluctuate and they cannot know if household members are working more hours or got raises from the previous year.