Obamacare Subsidies Doled Out Using 'Honor System'; Billions in Fraud Feared

Obamacare’s delayed implementation of the employer mandate means health insurance exchanges and the Internal Revenue Service (IRS) will be unable to determine whether individuals are eligible for taxpayer-funded subsidies and will instead now rely on the honor system. Experts say the shift could result in billions of dollars in waste, fraud, and abuse.

"If the IRS doesn't have information about the plans large employers offer, it will be very hard to verify that. It will be an honor system," University of Michigan Law Professor Nicholas Bagley told Reuters. "The shift of employees to the exchanges could cost (the government) a boatload. Some people who are ineligible for subsidies, because their employer offers affordable insurance, may attempt to get subsidies on the exchanges. The IRS will have a hard time policing that sort of conduct."

Forbes writer Avik Roy says the reason for the Obama Administration’s decision to move forward with the new scheme is clear.

“The goal here is plain as day,” writes Roy. “The Obama administration is laser-focused on making sure that enough Americans enroll onto Obamacare-subsidized health insurance platforms, because if they do, it will be politically impossible for Republicans to repeal Obamacare in the future.”

Roy added: “Deliberately encouraging tens of billions of dollars of waste, fraud, and abuse in order to achieve a political objective is profoundly immoral.”

National Review’s Yuval Levin says the Obama Administration “seems to be operating under the assumption that the way to secure Obamacare’s future is to get as many people as possible into the system and receiving subsidies,” despite the “increase cost of the exchange subsidies."

Republicans have blasted Obama’s last-ditch decision to waive the employer mandate as further evidence that Obamacare is unworkable. House Oversight and Government Reform Chairman Rep. Darrell Issa has also raised the question of whether ignoring key pieces of the healthcare law is even constitutional.

“As a former constitutional law teacher, President Obama must know that this action gets into very questionable constitutional territory,” said Issa in a statement to Roll Call. “It also paves the way for future administrations to simply not enforce parts of Obamacare they don’t believe are functioning well.”

The Obama Administration is scrambling to complete the Obamacare health insurance exchanges before the October enrollment period begins.


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