The GOP’s income verification ‘concession’ is meaningless

(Photo by Jonathan Alcorn/Reuters)
(Photo by Jonathan Alcorn/Reuters)

The primary reason our federal government closed for 16 days and came very close to defaulting on its debt obligation was a dispute over whether to fund the new health-care law. Now the two parties have reached a deal to end the shutdown, and the one change made to President Obama's signature health legislation as part of the deal won't actually change anything at all.

The change centers on what the Department of Health and Human Services does to verify incomes submitted by applicants in the new marketplace. This is important because, without income verification, shoppers could say they earn a  tiny salary so that they can net a higher level of insurance subsidies.

Now, this would not be the best-laid plan for scamming the government. Anyone who submitted a falsely lower income level would likely have to pay those subsidies back to the federal government after filing an income tax report that revealed higher earnings. They could accused of fraud and face penalties. But, for at least a few months, they could get a cheaper insurance plan.

Over the summer, Health and Human Services scaled back some of the income verification requirements on the marketplace. Instead of auditing every applicant, HHS said, states would audit a statistically significant number of people who reported incomes that were strikingly different than what federal records showed.

Republicans balked, arguing that this would allow for rampant fraud. House Republicans passed legislation that would require the HHS inspector general to set up a new income verification system before any subsidies could go out. That could have created a big obstacle for the health-care law.

But that demand didn't make it into the agreement signed by the president Wednesday night. Instead, the deal basically requires two submitted reports in the course of the next year. Health and Human Services Secretary Kathleen Sebelius is due to submit the first report by Jan. 1, which must detail "the procedures employed by American Health Benefit Exchanges to verify eligibility for credits and cost-sharing reductions described in subsection."

Six months later, the HHS inspector general is required to submit a report "regarding the effectiveness of the procedures and safeguards provided under the Patient Protection and Affordable Care Act for preventing the submission of inaccurate or fraudulent information by applicants."

Phil Klein at the Washington Examiner has described this proposal as a "watered down" version of the original House plan. "The version currently being discussed would simply ask Secretary of Health and Human Services Kathleen Sebelius to certify that proper measures are in place," he writes. "At that point, the government can start releasing subsidies."

There's nothing about the income verification measures that passed Wednesday night that will change Obamacare, aside from a few staff members at Health and Human Services devoting some hours to gathering the data and writing up these reports. And that probably explains why Democrats were okay with passing this language in the first place.

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Brian Fung · October 17, 2013

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