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How 11 Fake Obamacare Patients Have Scammed Taxpayers For a Year (And Counting)

Sen. Orrin Hatch expresses frustration with the government website.

ByABC News
July 15, 2015, 4:32 PM
The Affordable Care Act website, of which a prior version is shown, has been subject to "a handful" of hacking attempts.
The Affordable Care Act website, of which a prior version is shown, has been subject to "a handful" of hacking attempts.

— -- An angry Sen. Orrin Hatch declared taxpayers are being scammed by a flaw in Obamacare, and it’s happening right under the government’s nose. He predicted people will be shocked by what they hear in his hearing room Thursday when the Government Accountability Office (GAO) releases troubling findings from its year-long undercover investigation of the federal healthcare exchanges.

“Bad actors can game the system. It’s an example of gross mismanagement,” Hatch, R-Utah, said in an interview with ABC News between Senate votes.

Last year, the GAO set up a “secret shopper” undercover investigation. The agency created 12 fake identities to attempt to obtain healthcare premium subsidies through the website. Over the internet and on the telephone, the federal exchange approved 11 of the 12 fraudulent applications, according to the report.

The government then doled out $2,500 per month or $30,000 per year in credits for insurance policies for these fabricated people.

The chief GAO investigator Seto Bagdoyan will testify Thursday that the website’s document processor is not required to detect fraud. Undercover investigators supplied fabricated documents, including proof of income and citizenship, even fake Social Security numbers which were accepted with no questions asked.

Hatch says he’s appalled that federal contractors authenticated the documents, allowing taxpayers to be swindled out of thousands of dollars.

What makes Hatch really mad is that the scam is still going on. Even though GAO presented its undercover investigation at a hearing last year, the agency re-enrolled the 11 fictitious applicants this year, never getting detected by so-called system safeguards. In one case, GAO did receive a letter threatening to cancel coverage on one of its fake applicants. But guess what? Nothing happened. Both the coverage and the financial credits continued.

A few months ago, half of the fictitious applicants received notices that they were being terminated for failing to submit documentation with their re-enrollment. Investigators finally thought their scam was uncovered. But when investigators called the exchange, they were able to reinstate 10 fake applicants and get even higher subsidy amounts, the GAO report says.

The Department of Health and Human Services did not respond to a call from ABC News, but reported to the GAO that there was “no indication of a meaningful level of fraud.”

Hatch’s Democratic counterpart on the Finance Committee, Sen. Ron Wyden of Oregon, pointed out that more than 100,000 have been eliminated from the Obamacare rolls for fake documentation.

Read the full GAO report HERE.