Republicans call Obamacare subsidies a risk to taxpayers

WASHINGTON, June 10 Tue Jun 10, 2014 6:49pm EDT

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WASHINGTON, June 10 (Reuters) - Congressional Republicans sought to portray Obamacare subsidies for low-income families as a financial risk for taxpayers on Tuesday, a claim that could become a new avenue for campaign attacks on Democratic candidates this fall.

At a hearing in the Republican-controlled U.S. House, witnesses from conservative groups said overpayments of federal subsidies to people newly enrolled in Obamacare health plans could reach hundreds of billions of dollars while jeopardizing the health coverage and federal tax refunds of subsidy recipients found to owe money.

Republicans are seeking to suspend the subsidies, which form the basis for the Obamacare health insurance marketplaces, until there is a system in place to better verify applicant information. About 85 percent of the 8 million people who have enrolled in private coverage under Obamacare sought subsidies, according to the administration.

The testimony came a week after the administration reported inconsistent data in the Obamacare health insurance applications of 2.2 million Americans, including 1.2 million with questionable income data. Officials say most inconsistencies are not errors but innocuous discrepancies that can be cleared up without a problem. But critics see a potential for major issues.

"The system (is) essentially unworkable," said Douglas Holtz-Eakin, a former director of the nonpartisan Congressional Budget Office who now heads the American Action Forum, a conservative policy institute.

Ryan Ellis, tax policy director at Americans for Tax Reform, a group led by anti-tax activist Grover Norquist, said subsidy overpayments could wreak havoc during next year's 2014 tax filing season as preparers and taxpayers come to terms with the effects of miscalculated insurance subsidies.

"Americans don't understand what this is going to do to them," Ellis said.

Republican lawmakers, who are using Obamacare as a major line of attack for November's midterm elections, took those claims as fresh evidence that Obama's Affordable Care Act (ACA) will harm American families and bloat federal deficits.

Democrats accused Republicans of using "fake outrage" to push their goal of repealing Obamacare.

"It sounds to me as though the testimony of some of the ... witnesses is fear-mongering to make people afraid," said Representative James McDermott, a Washington state Democrat.

Ron Pollack, executive director of Families USA and an advocate of the healthcare law, said the discrepancies were worth examining, but described the concerns as "much ado about very little."

Charges that ACA subsidies will hurt taxpayers and policyholders have not become fodder for the election campaign so far. But that could change in coming months.

"Obamacare has been a failure from start to finish and this is just the latest example. Highlighting Democrats support for Obamacare will be a key part of our efforts this fall," said Andrea Bozek, spokeswoman for the National Republican Campaign Committee. (Editing by Caren Bohan and Gunna Dickson)

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