Senator Worries Too Many Ineligible People Getting Obamacare Subsidies

Senate Homeland Security committee chair cites flaws in the system.

He said the flaws in CMS' system, plus President Obama's executive actions on immigration that grant legal status to more young undocumented immigrants and their families, could lead to more ineligible applicants gaining access to health insurance tax credits for low-income individuals.

The Supreme Court is expected to rule on the constitutionality of the immigration executive actions -- DAPA and an expanded version of the DACA program -- in June. Until then, the two programs cannot be implemented, although children who had already been granted deferred action under the original DACA are still protected by it.

Johnson cited previously released statistics showing almost 500,000 applicants had to have their tax credits revoked after they didn't provide sufficient documentation, which he said his staff estimates to work out to about $750 million in taxpayer funds in the form of tax credits.

He said in his report that the IRS and Centers for Medicare and Medicaid Services are not doing a good enough job recouping credits and subsidies awarded on behalf of people who fail to verify their legal status in the country.

If they do not or cannot supply that information when they apply, they can still apply and receive a tax credit but must supply the identification information to the correct agency within a set period of time. It doesn't necessarily mean that all 500,000 of the applicants whose subsidies were revoked had them revoked because they are undocumented.

"Lack of verification does not mean an individual is ineligible for financial assistance, but only that a Marketplace did not receive sufficient information to verify eligibility in the time period outlined in the law," CMS spokesman Benjamin Wakana said.

Indeed, in May 2014, roughly 970,000 people had citizenship or immigration data-matching errors on their applications, a number that by the end of the year had dwindled to 109,000 as applicants who provided documents that were originally not part of their application, meaning only about 11 percent of applicants, had their tax credits terminated, proof of which would have appeared on their annual tax filings.

"We have a robust verification process to make sure that those who are eligible for financial assistance can receive it, while also protecting taxpayer dollars," Wakana added.

Still, Johnson said in his report that more needs to be done to make sure people who are ineligible for health care tax subsidies never get them, even for a short time.

"While CMS and the IRS must improve their coordination to ensure the administration recoups the $750 million improperly awarded,” he said, “they also must work to prevent future improper spending of this type.”