This Is How Easy It Is to Scam Obamacare

Federal auditors duped healthcare.gov 11 out of 12 times

A sign directs people to an insurance company where they can sign up for the Affordable Care Act, also known as Obamacare, on Feb. 5, 2015, in Miami.

A sign directs people to an insurance company where they can sign up for the Affordable Care Act, also known as Obamacare, on Feb. 5, 2015, in Miami.

Photographer: Joe Raedle/Getty Images

When healthcare.gov opened in late 2013, it was so crippled by technical problems that critics questioned whether people would be able to sign up for coverage. Now, it may actually be too easy to enroll.

That’s according to a new government audit, presented in testimony from the Government Accountability Office, delivered at a Senate Finance Committee hearing on Thursday. When federal auditors tried to apply for insurance coverage and tax credit subsidies using fictitious applicants, they succeeded 11 out of 12 times. Here are some highlights from the GAO’s undercover investigation:

Fake applicants got through on the phone

The auditors couldn’t get coverage for fake applicants just by going online, because the website couldn’t verify their identities. But investigators successfully completed the fake applications on the phone and got coverage for almost all of them. In the one enrollment that didn’t succeed, the applicant declined to give a Social Security Number, though other cases that had missing or invalid SSNs were approved.

Communication with applicants is still mixed up

The marketplace asked eight of the fake applicants for additional documents to prove citizenship and identity, “but an accompanying list of suitable documents that could be sent in response consisted of items for proving income.” This arguably says more about healthcare.gov’s consumer experience than it does about its fraud controls.

All 11 applicants kept coverage despite missing documents 

The auditors submitted either fake, partial, or no documentation in response to requests. All were automatically renewed in subsidized coverage for 2015.

Six fake applicants got kicked off in 2015, but five got back on

Auditors got the health plans reinstated by calling up the marketplace again. They even got larger subsidies, without asking for a change.

Enrolling in person was difficult

The GAO also tried to send six investigators to third-party groups known as “navigators” contracted by the government to help people sign up for coverage in person. They wanted to see whether the navigators would help applicants fudge income levels to qualify for subsidies. But in five of the six cases, they couldn’t get assistance at all.

It’s a scam with little incentive

Overall, the testimony reveals a messy system that failed to catch deliberate defrauding attempts. The GAO says its results can’t be generalized to the wider population of applicants. The Centers for Medicare and Medicaid Services, which runs healthcare.gov, has terminated enrollments for more than 200,000 people because of questions over their identities.

Meaghan Smith, a spokeswoman for the Department of Health and Human Services, points out that the website successfully blocked investigators’ first attempts to enroll. In an e-mail, she said the agency has improved “our processes and communications for those with a data matching issue as we work to bolster the integrity of the process.”

The GAO’s investigation is sure to become a Republican talking point. But it’s not as big a deal as critics of the Affordable Care Act will make it out to be. The GAO didn’t actually uncover any evidence of fraud, and there’s not much incentive for scammers to do what the investigators did. The subsidies don’t come in the form of a cash payment—they’re a discount to a premium—making it tough for crooks to engineer schemes to get money out of Obamacare on a vast scale, as they have with tax refunds or Medicare.

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