Obamacare exchanges not properly verifying applicant data -watchdog

WASHINGTON, July 1 Tue Jul 1, 2014 3:38pm EDT

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WASHINGTON, July 1 (Reuters) - Online insurance marketplaces created under President Barack Obama's signature healthcare law are struggling to verify whether Americans who applied for government subsidies to purchase health insurance are actually qualified to receive them, a federal watchdog agency said on Tuesday.

The Department of Health and Human Services Office of the Inspector General said in two reports that some "internal controls" were ineffective in verifying eligibility at the marketplaces run by the federal government, California, Connecticut and some other states.

To qualify for insurance subsidies, applicants must enter income data, Social Security numbers and other information into the online systems. The maximum household income to qualify for a subsidy is four times the federal poverty level, or about $94,200 for a family of four, and subsidies increase as income levels fall.

"The deficiencies in internal controls that we identified may have limited the marketplaces' ability to prevent the use of inaccurate or fraudulent information when determining eligibility of applicants for enrollment in qualified health plans," the inspector general said.

The reports mark the second potential setback in two days to the 2010 healthcare law after the U.S. Supreme Court on Monday limited its mandate to provide universal contraception coverage for women.

The HHS inspector general's findings prompted fresh complaints from Republicans in Congress, whose attention in recent weeks had been redirected to other issues in the runup to November's mid-term elections.

"When Obamacare was passed, its chief architects told us they would have to pass the bill to find out what was in it," said Senator Orrin Hatch, the top Republican on the Senate Finance Committee. "Today's report confirms what we knew was not included: safeguards to protect hard-earned taxpayer dollars from an incompetent bureaucracy."

The California marketplace had difficulties verifying citizenship and lawful presence, while the federal marketplace had difficulty verifying Social Security numbers, the inspector general said.

A companion report found that the federal and some state insurance marketplaces were unable, in their early months of operation, to resolve most inconsistencies between applicants' self-supplied information and data received through other federal sources, most commonly citizenship and income levels.

Under the Affordable Care Act, applicants whose incomes are below certain levels can qualify for taxpayer subsidies for health insurance purchased on the exchanges.

The federal marketplace was unable to resolve 2.6 million of 2.9 million inconsistencies as of the first quarter of 2014, because of systems not fully operational from October through December last year.

"These inconsistencies pertained to citizenship, national status, and lawful presence; income and employer-sponsored minimum essential coverage," the inspector general said.

On Monday, the Supreme Court ruled 5-4 that owners of private companies can object on religious grounds to an Affordable Care Act provision that requires insurance covering certain kinds of birth control for women, but this applies only to a number of small family or closely held companies. It means perhaps several thousand female employees who receive health insurance from these firms may have to obtain some forms of contraception coverage elsewhere. (Reporting By David Lawder; editing by Gunna Dickson)

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