WaPo's Report on Obamacare's Subsidy Mess Gets Almost No Other Establishment Press Coverage

May 24th, 2014 12:51 AM

The press continues its disinterested fiddling while the royal mess known as Obamacare burns through money and exhausts the patience of those attempting any kind of oversight.

One of the more obvious examples of this is how the Washington Post's May 17 story on errors in calculating Obamacare subsidies has gone absolutely nowhere. About one-third of the 20 results returned in a Google News search on "healthcare subsidies" (not in quotes) at 11 p.m. ET Friday evening were partial reprints or rewrites of the original story by WaPo reporters Amy Goldstein and Sandhya Somashekhar. Most of the remaining results were from center-right outlets, while a few came from medical sites. The results didn't change much when searching on "health care" instead of "healthcare." What the WaPo pair reported is a breathtaking cacophony of incompetence which, as Heritage noted last year, won't even "solve" itself when Obamacare enrollees file their 2014 tax returns. Goldstein and Somashekhar also missed an opportunity to make a fundamental point, which is that everyone who has enrolled has some exposure.

Here are excerpts from the pair's work identifying the extent of the subsidy system's train wreck (bolds are mine throughout this post):

Federal health-care subsidies may be too high or too low for more than 1 million Americans


The government may be paying incorrect subsidies to more than 1 million Americans for their health plans in the new federal insurance marketplace and has been unable so far to fix the errors, according to internal documents and three people familiar with the situation.

The problem means that potentially hundreds of thousands of people are receiving bigger subsidies than they deserve. They are part of a large group of Americans who listed incomes on their insurance applications that differ significantly — either too low or too high — from those on file with the Internal Revenue Service, documents show.

The government has identified these discrepancies but is stuck at the moment. Under federal rules, consumers are notified if there is a problem with their application and asked to upload or mail in pay stubs or other proof of their income. Only a fraction have done so, according to the documents. And, even when they have, the federal computer system at the heart of the insurance marketplace cannot match this proof with the application because that capability has yet to be built, according to the three individuals.

Let's stop there. Almost nine months after HealthCare.gov's rollout and 50 months after the Affordable Care Act's passage, a critical computer capability "has yet to be built." Will it be ready for the next open enrollment? Will it ever be ready? Are we really going to see another year of the fraudster's dream known as "honor system"?


... piles of unprocessed “proof” documents are sitting in a federal contractor’s Kentucky office, and the government continues to pay insurance subsidies that may be too generous or too meager. ...

Under White House pressure, federal health officials and the contractor, Serco, are this weekend beginning to step up efforts at resolving a variety of inconsistencies that have appeared in applications, including income discrepancies.

You read that right. We're talking about Serco — again.

Serco is the collection of con artists who convinced the Centers for Medicare and Medicaid Services that it needed to pay it $1.25 billion for a five-year contract to process paper Obamacare enrollment applications, and which has hundreds upon hundreds of employees in three states sitting at their cubicles doing almost nothing because there are very few paper apps. I have estimated that the cost of processing each Obamacare paper app is between $5,700 and $17,300. My midpoint estimate is $11,500.

Here's a novel idea: How about putting the people who are sitting around doing nothing to work on this problem?

Though Missouri TV station KMOV had already done five reports on the Serco paper app processing scandal by the time Goldstein's and Somashekhar's story appeared, the two WaPo reporters failed to mention it.

There's an even better reason than subsidy verification that the government and Serco need to get off their dead butts and story attacking their backlog:

Because the computer capability does not yet exist, the work will start by hand, according to two people familiar with the plans. It will focus at first not on income questions, but on another roughly 1 million cases in which people enrolled — or tried to enroll — in health plans and ran into questions about their citizenship status. Throughout the sign-up period that ended earlier this spring, flaws in HealthCare.gov blocked many naturalized citizens or permanent legal residents, requiring them to submit immigration documents that are, like the income information, caught in a backlog.

Holy moly. This situation deserves a story all its own.

Read that again. Up to 1 million "cases" — that's "people" or "households" to me and you — may not be getting coverage under President Obama's "signature achievement." To the extent this is the case, they are in the ranks of the uninsured. To the extent they're considered "enrolled" but not covered, they directly reduce the number of people legitimately covered under Obamacare, which the administration still insists is 8 million.

Let's get back to the story and look at that 8 million for a moment:

Of the roughly 8 million Americans who signed up for coverage this year under the health-care law, about 5.5 million are in the federal insurance exchange. And according to the internal documents, more than half of them — about 3 million people — have an application containing at least one kind of inconsistency.

It isn't unreasonable to believe that the same problem – or worse — exists in the state exchanges, at least four of which are certified failures.

The point that Chris Jacobs at Heritage made a year ago about what happens when Obamacare participants file their 2014 returns bears repeating (links are in original):

How the Obamacare "Honor System" Will Encourage Fraud

Earlier this month, the Obama Administration—in a 600-plus page regulation—announced that for 2014, Obamacare insurance subsidies will essentially operate on the “honor system.” This will create incentives for fraud, as some applicants may report an income that is actually lower than their true income in order to qualify for the taxpayer-funded subsidy.

In most cases, the IRS will not attempt to verify an individual’s income when he or she is applying for subsidies. Supporters of the law claim that the changes will not encourage fraud, because “applicants who receive [subsidies] for which they are ineligible will have to pay them back when they file their taxes.” Unfortunately, that claim isn’t entirely accurate. Some individuals will only face a maximum $2,500 in repayment, while receiving far more in benefits.

As if we didn't have enough of it already in so many other venues, here's more income and wealth redistribution rewarding "clever" lawlessness.

The final point, via me, is that Obamacare subsidies are based on either actual 2013 income or projected 2014 income. Even if an applicant submitted a good-faith estimate of either, their actual income for 2014 will in a large majority of cases — not just the roughly 1 million addressed in WaPo's coverage — slightly or sharply differ from what they submitted. Some will get a larger IRS refund than they might have expected, but others will either get smaller refunds or will owe money — in many cases substantial amounts.

The people who will owe substantial sums will mostly be those who thought they had improved their financial circumstances during the previous year. Maybe they got raises at employers who don't have health plans, or maybe their businesses turned in stronger than expected performances thanks to their hard work. These people will pay a steep price, which I suspect will in most cases be totally unexpected, for having done well. Some will learn that their hard work means that they must return all of the subsidies. It's hard to underestimate the work-disincentivizing effect this will have on highly productive people.

Unless somebody gives them a heads-up, they won't know about any of this until after November 2014. It's clear that the press, which won't even touch a mostly hard-hitting story published in one of their own favorite outlets — the Associated Press still has no recent national story of any kind on Serco, despite now having two reasons to have one — is in no hurry to tell them.

Cross-posted at BizzyBlog.com.