The head of a Senate investigative subcommittee said he plans to look into problems with the health insurance marketplaces set up for the Affordable Care Act that forced many taxpayers to owe some of the tax credit money they had received for buying health insurance.
Senate Permanent Subcommittee on Investigations chairman Rob Portman, R-Ohio, said Thursday his panel is investigating mismanagement of the Affordable Care Act health care exchanges. His subcommittee is also reviewing whether adequate verification procedures were in place to ensure that roughly $15 billion in insurance subsidies paid out last year reached the people who actually qualify.
Portman expressed concern that reported breakdowns in the process for calculating subsidies have not only been unfair to some consumers who bought insurance through the exchanges but also put taxpayer dollars at risk.
“The Administration assured Congress that the eligibility verification process for the exchanges was working, but millions of Americans are now learning that they received overpayments that they have to repay,” Portman said in a statement. “I’m concerned that the subsidy eligibility process is so complicated that many consumers believed they were receiving cheaper insurance coverage than they ultimately got. And further verification failures risk wasting billions in hard-earned tax dollars,”
In January 2014, the Department of Health and Human Services certified to Congress that the state and federal exchanges were capable of directing subsidies to qualified consumers and avoiding wasteful overpayments. But a number of independent reports suggest that the eligibility verification process has been broken from the start. The Inspector General of HHS reported early last year that the government was not prepared to resolve 89 percent of the millions of known inconsistences between information reported through the exchanges and other government databases. In an undercover investigation, the Government Accountability Office tried to obtain subsidies through the federal exchange using 12 different false identities and succeeded 11 times.
More recently, millions of Americans learned during tax season that they received subsidy overpayments. H&R Block reported last month that nearly two-thirds of tax filers who received subsidies through the exchanges received overpayments and, as result, will have their refunds cut or receive a bill from the Internal Revenue Service (see Obamacare Tax Credit Recipients Had to Repay Average of $729). According to a survey by H&R Block, many taxpayers never understood they received subsidies through the exchanges in the first place, and “virtually everyone surveyed was confused about the tax credit reconciliation process.”
In connection with his inquiry, Portman sent a letter Thursday to HHS Secretary Sylvia Mathews Burwell raising a number of questions concerning the verification. His subcommittee also issued a request for documents about the reported breakdowns in the verification process for state and federal exchanges so it could conduct its own review.
“One expert has estimated that the government could stand to lose approximately $152 billion in overpayments over 10 years,” Portman wrote, citing the testimony of Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank. “Because tax enforcement is not perfect, we also know that a sizable share of these funds is effectively unrecoverable. Moreover, even if tax enforcement were perfect, billions in overpayments could be lost forever because the ACA caps recovery of overpayments above specified thresholds.”
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