Up to 1M health law subsidies in dispute
WASHINGTON — The government may be paying incorrect subsidies to more than 1 million Americans for their health plans in the federal insurance marketplace and so far has been unable to fix the errors, according to internal documents and three people familiar with the situation.
The problem means that potentially hundreds of thousands of people are receiving bigger subsidies than they deserve. They are part of a large group of Americans who listed incomes on their insurance applications that differ significantly — too low or too high — from those on file with the Internal Revenue Service, documents show.
The government has identified these discrepancies but is stuck. Under federal rules, consumers are notified of a problem with their application and asked to upload or mail pay stubs or other proof of their income.
Only a fraction have done so, according to the documents. And even when they have, the federal computer system at the heart of the insurance marketplace cannot match this proof with the application because that capability has yet to be built, according to the three individuals.
So piles of unprocessed “proof” documents are sitting in a federal contractor's Kentucky office, and the government continues to pay insurance subsidies that may be too generous or too meager. Administration officials do not yet know what proportion are overpayments or underpayments. Under the rules, people receiving unwarranted subsidies will be required to return the excess next year.
The inability to make certain the government is paying correct subsidies is a legacy of computer troubles that crippled last fall's start of HealthCare.gov and the initial months of the first sign-up period for insurance under the Affordable Care Act. Federal officials and contractors raced to correct most of the technical problems hindering consumers' ability to choose a health plan. But behind the scenes, important aspects of the website remain defective — or simply unfinished.
White House officials recently have begun to focus on the magnitude of income discrepancies. Beyond their concerns regarding overpayments, members of the Obama administration are sensitive because they promised congressional Republicans during budget negotiations last year that a thorough income verification system would be in place.
Under White House pressure, federal health officials and the contractor, Serco, are this weekend beginning to step up efforts at resolving a variety of inconsistencies that have appeared in applications, including income discrepancies. One White House official, speaking on the condition of anonymity about internal discussions, said White House and federal health officials are “all on the same page that the issue needs to be resolved as soon as possible.”
Because the computer capability does not exist, the work will start by hand, according to two people familiar with the plans. It will focus at first not on income questions, but on about 1 million cases in which people enrolled — or tried to enroll — in health plans and ran into questions about their citizenship status.
The work of sorting inaccurate incomes — and inaccurate subsidies, as a result — likely will begin in the summer, two individuals familiar with the plans said.
Julie Bataille, communications director for the Centers for Medicare and Medicaid Services, the agency overseeing the federal insurance exchange, said: “The marketplace has successfully processed tens of millions of pieces of data — everything from Social Security numbers to tribal status to annual income. While most data matched up right away during the application process, we take seriously the cases that require more work and have a system in place to expeditiously resolve these data inconsistencies.”
Bataille added that “an inconsistency does not mean there is a problem with a consumer's enrollment” but that the consumer must send in additional documentation to verify whether their application information is accurate.
“We're working every day,” she said, “to make sure individuals and families get the tax credits they deserve and that no one is receiving a tax credit they shouldn't.”
Of the various technical problems that remain with HealthCare.gov, the difficulty in straightening out discrepancies affects an especially large number of consumers. Of the 8 million Americans who signed up for coverage this year under the health care law, about 5.5 million are in the federal insurance exchange. And according to the internal documents, more than half of them — about 3 million people — have an application containing at least one kind of inconsistency.