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Obamacare Insurance Markets Still Vulnerable to Fraud, Experts Say

The Obamacare health insurance exchanges are still easily tricked by fraudulent applications, the government's accountability office says.
The website after it relaunched on Nov. 15, 2014.
The website after it relaunched on Nov. 15, 2014.Matt Nighswander / NBC News file

The Obamacare health insurance exchanges are still easily tricked by fraudulent applications, with fake Social Security numbers and bogus immigration details, more than a year after the weakness was first pointed out, officials say.

A Government Accountability Office sting also found that many people were double-covered by private insurance and Medicaid after signing up on the exchanges, and that others were allowed to mistakenly go without coverage.

“Our undercover testing for the 2015 coverage year found that the health care marketplace eligibility determination and enrollment process remains vulnerable to fraud,” Seto Bagdoyan of GAO’s Forensic and Investigative Service wrote in testimony prepared for a hearing Friday of the House Energy and Commerce Committee’s health subcommittee.

“We created application scenarios with fictitious applicants claiming to have impossible Social Security numbers; claiming to be working for an employer that offers health insurance, but not coverage that meets ‘minimum essential’ standards; or already having existing qualified health-plan coverage,” Bagdoyan writes.

“We made four of these 10 applications online and the other 6 applications by phone.”

These and other phony applications all got through.

“The federal marketplace or selected state marketplaces approved each of our 10 fictitious applications for subsidized qualified health plans,” Bagdoyan wrote. “We subsequently paid premiums to put these policies into force.”

They all got federal subsidies, too.

Maybe, says the Health and Human Services Department. But would anyone actually do this?

"It seems unlikely that many uninsured Americans, many of whom have less than $100 in savings, would choose to commit perjury in order to pay the premiums and deductibles for two insurance policies or to pay premiums for marketplace insurance when eligible for Medicaid," said HHS spokeswoman Meaghan Smith.

"In addition, the Affordable Care Act's design reduces the incentive for individuals to lie on their application because financial assistance is paid directly to the issuer, so an individual cannot directly profit."

And GAO’s Carolyn Yocom submitted testimony saying the Health and Human Services Department doesn’t have enough checks to make sure people can move smoothly between Medicaid coverage and private insurance on the exchanges.

“In addition, we found that some individuals had duplicate coverage,” Yocom wrote.

“While some amount of duplicate coverage is permissible under federal law — and may be expected during the transition from exchange to Medicaid coverage — we found that duplicate coverage was also occurring under other scenarios, such as when individuals do not end their subsidized exchange coverage after being determined eligible for Medicaid.”

It’s more ammunition for the Republican-controlled House, which has been seeking to show the 2010 Affordable Care Act is poorly designed, riddled with problems and too expensive. Republicans continue to promise to try to repeal the law.

The non-partisan GAO has been warning of the flaws.

In 2014, the accountability office warned that 11 out of 12 fake applications for subsidies got through the verification process.

Then GAO found last July that they all got automatically re-enrolled for 2015.

"When we are provided with information that we can use to improve the Marketplace, we take action," Smith said.

"That’s why we have repeatedly requested and remain disappointed to still not receive from the GAO specific details and recommendations relating to their fraudulent applications to enable us to analyze and understand what occurred and whether we can make improvements to our processes or procedures."