ACA subsidy issues hurting broker credibility

The Affordable Care Act subsidy program has come under fire this week. The Government Accountability Office on Wednesday reported results of an undercover investigation that found 11 out of 12 GAO-submitted applications with fake information, such as falsified income and citizenship documents, were approved and awarded subsidies on the federal exchanges.

This comes a day after two district courts released competing decisions on whether subsidies can be offered altogether in the 36 states with federally run marketplaces — with the D.C. Circuit Court of Appeals deciding against the federal subsidies, the first such ruling in a lengthy appeals process against the ACA’s subsidies.

When consumers are able to go through Healthcare.gov themselves to obtain subsidies with false information or due to a personal circumstance where they technically shouldn’t be eligible for the award under the ACA, it undermines benefit brokers and agents’ credibility, according to one Texas-based adviser.

‘Scary situation’

Tanya Boyd, a broker and owner at Tanya Boyd and Associates in Sunnyvale, Texas, says she had a customer come to her during open enrollment 2014 after a job loss and asked if Boyd could help her obtain coverage and a subsidy on Healthcare.gov. When Boyd explained to the consumer that her spouse had employer-sponsored coverage that met ACA requirements, thus disqualifying them from being subsidy-eligible, the woman was disheartened and decided to try anyway herself.

“I told her no, and then her sister gave her advice to still try getting a subsidy,” Boyd recounts. “She took her sister’s advice over my advice and she called [the call center] and sure enough, she got a subsidized health plan. We want to follow the rules, but if they don’t like our answer and they go around us and get different information, that’s a scary situation.”

If consumers continue to be able to obtain subsidies, through the federal exchanges, in circumstances where they shouldn’t actually be eligible under the law, Boyd sees serious potential consequences ahead for many parties in the health care system. In fact, the GAO estimates there were 2.6 million “application inconsistencies” nationally on the exchanges.

“The Feds were supposed to have everything in place to be verified in real-time,” she says. “I think it could affect rates, consumers might have to owe money back, and it’s going to affect doctors. Providers won’t be able to decline to see [consumers with subsidized health exchange coverage] just because they’re part of a network, but what they can do is close their practices to new patients.”

See related: Advisers question ACA income calculation in light of slew of discrepancies

GAO report

Wednesday’s GAO report also found the undercover applicant was unable to obtain in-person assistance from navigators in five out of six attempts to solicit such help.

One navigator stated “assistance was not available because Healthcare.gov was down and another declined to provide service,” reads a U.S. Senate finance committee statement on the report. “These assisters have received tens of millions of dollars in federal grants to provide services to applicants.”

“Obamacare is a mess,” said Republican Rep. Charles Boustany of Louisiana, who chairs the U.S House of Representatives Ways and Means Oversight Subcommittee, in a statement Wednesday. “Its broken structure invites waste, fraud and abuse that will cost the American taxpayer millions in subsidies to individuals whose eligibility the administration won’t bother to verify.”

He added: “We can and must do better.”

Boustany’s committee held a hearing Wednesday morning for lawmakers to discuss the issues with subsidies, in conjunction with the release of the GAO report.