By: Robert Pear
An independent audit of insurance exchanges established under the health care law has found that federal and state officials did not properly check the eligibility of people seeking coverage and applying for subsidies, the latest indication of unresolved problems at HealthCare.gov.
In a report to Congress on Tuesday, the inspector general for the Department of Health and Human Services, Daniel R. Levinson, said that the exchanges, which enrolled eight million people, did not have adequate safeguards "to prevent the use of inaccurate or fraudulent information when determining eligibility."
Moreover, in a companion report, the inspector general said that the government had been unable to verify much of the information reported by people applying for insurance coverage and financial assistance to help pay premiums.
"As of the first quarter of 2014," Mr. Levinson said, "the federal marketplace was unable to resolve about 2.6 million of 2.9 million inconsistencies" -- 89 percent of the discrepancies -- because its automated eligibility system was "not fully operational."
Most of the discrepancies involved citizenship, immigration status or income.
The conflicts do not imply wrongdoing. But without resolving the many inconsistencies, Mr. Levinson said, "the marketplace cannot ensure that an applicant meets each of the eligibility requirements."
Even when consumers provided "appropriate documentation," he said, the government was often unable to resolve conflicts between federal records and data on application forms, signed by consumers under penalty of perjury.
The administration, he said, did not have effective controls in place to perform basic tasks like validating Social Security numbers and verifying the identity of people who applied by telephone.
Federal officials are running insurance marketplaces for three dozen states. The other states are running their own.
Mr. Levinson said that an electronic "data services hub," which links federal and state agencies, had problems, so states could not always verify data reported by people seeking subsidized insurance. Even when the data hub was working, he said, some information provided by federal agencies appeared to be inaccurate or outdated.
"One marketplace cited situations in which infants and young children included on applications were erroneously identified as incarcerated, according to federal data," the inspector general said. Another marketplace "reported that it had about 15,000 applications that it could not verify, because of data hub outages."
Four of the state marketplaces told the inspector general that they could not resolve some data discrepancies because of problems in their own information technology systems. The states were Massachusetts, Nevada, Oregon and Vermont.
Republicans in Congress said the findings supported their contention that the administration had rushed to pay subsidies before it could verify eligibility.
"The administration moved forward with implementation despite repeated warnings that the systems were not ready," said Representative Diane Black, Republican of Tennessee.
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Senator Orrin G. Hatch of Utah, the senior Republican on the Finance Committee, said, "Regardless of your political affiliation, the findings in these reports should concern every taxpayer."
Marilyn B. Tavenner, the administrator of the Centers for Medicare and Medicaid Services, which runs the federal exchange and supervises the state exchanges, said the problems were not surprising.
"This is the first year that consumers have applied for coverage through the marketplaces," she said. "Therefore, consumers are inexperienced with the eligibility process, which could lead to application mistakes."
But to date, Ms. Tavenner said, "there has been no evidence of an applicant defrauding the federally facilitated marketplace or a state-based marketplace in order to unlawfully enroll in a qualified health plan or take advantage" of subsidies for which the person was ineligible.
Moreover, she said, consumers will face a reckoning at tax time next spring. People who have received more in subsidies than they are entitled to may have to repay some or all of the difference with their income taxes.
Cleaning up problems in the federal and state exchanges is one of the biggest challenges facing the new secretary of health and human services, Sylvia Mathews Burwell.
The inspector general's report on "internal controls" was required under a law adopted last October. The same law called for the health secretary to certify that the exchanges were verifying eligibility before the government started paying subsidies. Kathleen Sebelius, then the health secretary, provided those assurances in a letter to Congress dated Jan. 1, two weeks before the subsidy payments began.
In view of the new findings, the Senate Republican leader, Mitch McConnell of Kentucky, said Tuesday that those assurances were misleading.
The federal government has paid out $4.7 billion in subsidies this year. The administration said last week that most people would be able to renew subsidized coverage without filing an application and without going back to HealthCare.gov.