Obamacare's Fraudulent Incentives

The Government Accountability Officeconfirmed yesterday what conservatives have been warning for years:Obamacare is an open invitation to fraud.

Specifically, GAO Forensic Audits and Investigative Service Acting Director Seto Bagdoyan testified before the House Ways and Means Committee about a GAO investigation that tested Obama administration claims about the internal controls the federal government has set up to prevent fraudulent Obamacare coverage and subsidies.

GAO investigators used fictitious identities and documents to apply for Obamacare coverage on 12 separate occasions. The Obama administration granted coverage and subsidies to 11 of 12 fraudulent applicants. Additionally, as of July 2014, the GAO reported that fake documentation sent for two enrollees had been "verified".

“The total amount of these credits for the 11 approved applications is about $2,500 monthly or about $30,000 annually. We also obtained cost-sharing reduction subsidies, according to marketplace representatives, in at least nine of the 11 cases,” Bagdoyan said.

According to the Congressional Budget Office, Obamacare is set to spend $1.4 trillion on Obamacare subsidies over the next ten years.

Obama's complete failure to prevent fraud in his signature domestic accomplishment even had some liberals questioning the administration. "This lack of oversight just isn’t acceptable," Indiana University School of Medicine professor Aaron Carroll (no relation) blogged, "The GAO should be checking this stuff, and the administration should be responding to it. Let’s see what happens."

Carroll should not hold his breath. Obama has every incentive to get as many "beneficiaries" signed up for Obamacare no matter how fraudulent they are.Democrats have made the number of "Americans" enrolled in Obamacare the defining metric for the law's success. There simply is no penalty for signing up fake people.

True, the IRS will supposedly fine people who "knowingly and willfully" provide false information $250,000. But no one believes the IRS will ever enforce those penalties. Carroll's co-blogger Nicholas Bagley, an assistant professor of law at the University of Michigan, explained to Vox, "The money at stake in any given case is too small, and the process for imposing civil money penalties too cumbersome, to justify much in the way of governmental enforcement."

"I would be surprised if the government decides to spend a lot of government resources on this," added Washington and Lee University law professor Timothy Jost.

In fact, the federal government has a long history of ignoring fraud in welfare programs. Just look at the Earned Income Tax Credit. According to the Inspector General of the Treasury Department, the IRS mails out somewhere between $13.3 billion and $15.6 billion in fraudulent EITC payments every year. That comes out to about 22 to 26 percent of the entire EITC program.

As long as a program's success is defined solely by how many people are benefitting, the federal government will continue to shell out billions in fraudulent payments every year. Obamacare only made that situation much, much worse.

http://townhall.com/tipsheet/conncarroll/2014/07/23/obamacares-fraudulent-incentives-n1865050