Human Services

Affordable Care Act Problems Multiply Part II: Fraud Concerns and Privacy

By: Tony Glosson

Welcome to Part II of our two-part series on pressing problems with implementation of the Affordable Care Act (ACA). In Part I, we explored some general logistical problems. In Part II, we provide details on fraud and consumer privacy concerns raised by those familiar with the ACA’s rollout.

“Honor System”

Just last month, the Department of Health and Human Services revealed that, when determining an employee’s eligibility for exchange subsidies, they will simply rely upon the word of the applicant, a system The Washington Post  dubbed, the “honor system.”

Eligibility for subsidies depends in part on whether an employer offers government approved health insurance plans, but, with the delay of the employer mandate until 2015, employers are no longer obligated to report whether they are providing coverage to employees. Under this system, “how can the government verify whether or not workers are eligible for subsidies?” Manhattan Institute health policy analyst, Avik Roy, recently asked.

According to a rule released by the Department of Health and Human Services (HHS) on July 5th, the exchanges will rely on the “honor system,” simply asking applicants to truthfully represent his or her eligibility for employer-sponsored insurance: “[t]he exchange may accept the applicant’s attestation regarding enrollment in eligible employer-sponsored plan… without further verification.”

It seems, potentially at great expense to the taxpayer, employees who are ineligible for subsidies will, nonetheless, be able to receive them “without further verification.”

Insurance Counselors and Fraud

There is a growing concern over the safety of exchange enrollees’ personal information and the potential for fraud.

On July 14th, the Associated Press reported that California Insurance Commissioner Dave Jones believes there is inadequate screening and monitoring of their 21,000 insurance counselors, who will provide exchange customer support and could have access to sensitive, personal information. This could have disastrous consequences, according to Commissioner Jones, with insurance counselors potentially obtaining  “information that will allow them to build the trust they have with the individual they’re working with and potentially sell them all manner of bogus products, steal their identity, gain access to certain assets they might have … [t]he list is virtually endless.”

Commissioner Jones also believes exchange officials are unprepared to investigate the misuse of personal information, and the Associated Press reports, “consumers who might fall prey to bogus health care products, identity theft and other abuses will have a hard time seeking justice if unscrupulous counselors get hold of their Social Security number, bank accounts, health records or other private information.”


In Depth: Human Services

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