The Obama administration wasn’t able to ensure that all tax-credit payments made to insurers under the health law in 2014 were on behalf of consumers who had paid their premiums, according to a federal oversight agency.
However, the agency noted the Obama administration this year is moving to a new automated system that should alleviate potential problems identified in its investigation. The Health and Human Services’ Office of Inspector General is scheduled to release the report Wednesday.
The findings raise questions about the oversight of tax-credit payments that went to insurers on behalf of consumers who qualified for financial assistance.
Tax credits are a major enticement to low- and moderate-income people who buy insurance on exchanges under the Affordable Care Act because they lower monthly premium costs. After consumers sign up for coverage, they can choose to have the federal government distribute the tax-credit payments to insurers to lower their premiums. Nearly $11 billion in tax credits were paid to insurers in fiscal 2014, according to a report by the Treasury Inspector General for Tax Administration.
The Obama administration said last year that about 85% of enrollees received the subsidy and got an average tax credit of $270 a month.
The inspector general found that the Centers for Medicare and Medicaid Services, which oversees the health law, didn’t have an effective process in 2014 for ensuring that those tax-credit payments were accurately made only on behalf of enrollees—meaning the agency couldn’t verify the payments to insurers were only for consumers who had paid their premiums.
Instead, the agency relied on each insurer to provide aggregated information to determine the total amount in tax credits that should be paid to the insurance company. That meant “there is a risk that funds were authorized for payment” in incorrect amounts, according to the report.
Centers for Medicare and Medicaid Services officials noted that the inspector general didn’t conclude that any overpayments were made to insurance companies.
“CMS has already addressed or is addressing the IG’s recommendations,” said Meaghan Smith, a spokeswoman for the agency. “Moreover, CMS is implementing a fully automated policy-based payment process beginning this month.”
Republicans critical of the health law have focused on the tax credits, saying inaccurate payments to consumers occurred—and are a sign that some federal funds were misspent. A July report by the Government Accountability Office found fictitious applicants on the federal exchange were able to fraudulently be approved for coverage and tax credits. A Health and Human Services inspector general report in August found that some consumers who got health coverage or subsidies on HealthCare.gov might not have been eligible to receive them in 2014 because of deficiencies in the federal exchange’s internal controls. Also in 2014, Republicans held congressional hearings on inaccurate subsidies.
Obama administration officials say they have implemented rigorous and effective internal controls to ensure accurate payments to insurers of tax credits.