Obama Administration Delays Enforcement of Income Eligibility for State Exchanges

Published August 2, 2013

President Obama’s administration has been forced to abandon the massive data verification system designed to check eligibility for its health information exchanges for at least the first year. Applicants for exchange subsidies in states with their own exchanges will not have their eligibility checked.

In response to the unilateral announcement from the Department of Health and Human Services (HHS) that it would not be checking income eligibility in these states, the House Energy and Commerce Committee Oversight and Investigations Subcommittee wrote to HHS Secretary Kathleen Sebelius demanding further explanation of the justification for the change.

“The administration had three years to implement this law and instead they single-handedly rewrote central components of it in three days,” Full Committee Chairman Fred Upton (R-MI) and Chairman Tim Murphy (R-PA) commented in a release. “Administration officials looked us in the eye and testified that implementation was on track, only to bury two major policy shifts as the nation celebrated July 4th.”

The committee noted that the significant policy change was mentioned quietly on page 350 of a 606-page regulation published on Friday, July 5, 2013, and may generate fraudulent spending.

Unilateral Rewriting of Law

Rep Marsha Blackburn (R-TN) told Health Care News the steps the administration is taking amount to rewriting Obama’s health care law.

“The administration clearly enjoys carrying forth with a process of picking and choosing whatever it is that they want to enforce, or not enforce, or go to court and defend,” Blackburn said. “The Obamacare legislation became law. It is their law. Of course, they had to pass it to read it and figure out what was in it. And they’re still trying to figure it out.”

Independent Women’s Forum senior health care policy analyst Hadley Heath said the administration has been implementing the law according to its political agenda.

“Using the so-called ‘honor system’ to determine subsidy eligibility in the exchanges is more evidence of this political agenda. Regardless of the motives of those who apply—whether they are trying to game the system or not—any claw-backs of fraudulent subsidies won’t happen until after taxes are filed in April 2015, long after the midterm elections in November 2014,” Heath said.

Unworkable in Implementation

According to Blackburn, the administration is shifting enforcement of the law as they discover how difficult it actually is to put in place.

“The legislation, the law as it is, is too expensive to afford,” said Blackburn. “It is not ready for prime time. There are too many mandates in it. There are too many rules and regulations in it, and the American people increasingly are saying it is not workable.”

The lack of verification and data matching concerns Rep. Blackburn, who said that even if the administration has the authority to delay the data matching requirements, it’s bad policy.

“In Tennessee, we have a program called TennCare,” she said, referring to Tennessee’s Medicaid program. “They stood the program up, put it in place, then had to come along and make some extensive changes to it because it had quadrupled in cost over a period of five years. The reason for that is there was no verification of eligibility. So people flocked to the program as a program of first choice, and history tells us that when you incentivize that use, when you are not verifying, you are going to see an increase in utilization.”

“What we did in Tennessee was have to come along and take about 25 percent of the people off the program and institute verification of eligibility,” said Blackburn. “We know what happens when you waive the verification. It will incentivize use.”

Increasing Likelihood of Defunding

Chris Jacobs, a senior policy analyst at the Heritage Foundation, said the Obama administration’s steps have increased the likelihood of the law being defunded or delayed.

“This is the latest admission from the administration that the law won’t work. Not just parts of the law, but the entire law won’t work. And so we think that the best approach is for Congress to defund all of Obamacare and not try to leave bits and pieces of it to continue to wreak havoc on the American people,” Jacobs said.

Jacobs believes CBO should score the legislation again with the employer mandate changes and without data matching for exchange eligibility, which he maintains would increase the possibility of repealing the law.

“Our position has been that short of full repeal,” said Jacobs, “full defunding is the best approach. We’re obviously mindful that the President is still the President, and will be in the White House for three years longer, but we think Congress always has the power of the purse, and when it comes to the budget the president proposes but the Congress disposes. Congress is fully within its power to say, ‘We are not going to spend a single dime on this law that is not going to work, and has been proven not to work based on what your own administration has said and done.’ And so we think that is the appropriate first step on the way to full repeal.”

Heath noted that defunding is a real possibility because the President has to sign appropriations bills.

“Lawmakers should repeal ObamaCare in its entirety,” Heath said. “Short of that, lawmakers should do everything in their power to defund, de-authorize, or delay the law. But lawmakers should keep in mind that every vote short of full repeal presents serious questions about both policy and strategy.”


Internet Resources:

House Energy and Commerce Committee: “Letter to HHS Regarding Verification Process in PPACA Exchanges”