ObamaCare's 'Liar' Subsidies
The White House says you can sign up 'without further verification.'
The White House seems to regard laws as mere suggestions, including the laws it helped to write. On the heels of last week's one-year suspension of the Affordable Care Act's employer mandate to offer insurance to workers, the Administration is now waiving a new batch of its own ObamaCare prescriptions.
These disclosures arrived inside a 606-page catch-all final rule that the Health and Human Services Department published on July 5—a classic Friday news dump, with extra credit for the holiday weekend. HHS now says it will no longer attempt to verify individual eligibility for insurance subsidies and instead will rely on self-reporting, with minimal efforts to verify if the information consumers provide is accurate.
Remember "liar loans," the low- or no-documentation mortgages that took borrowers at their word without checking pay stubs or W-2s? ObamaCare is now on the same honor system, with taxpayers in tow.
People are supposed to receive subsidies only if their employer does not provide federally approved health benefits. Since HHS now won't require business to report those benefits or enforce the standards until 2015, it says it can't ask ObamaCare's "exchange" bureaucracies to certify who qualifies either.
HHS calls this "a slight technical correction" though it is much more than that. The exchanges will not only start dispensing benefits "based on an applicant's attestation" about his employment insurance status. HHS is also handing the exchanges "temporarily expanded discretion to accept an attestation of projected annual household income without further verification."
In other words, anyone can receive subsidies tied to income without judging the income they declare against the income data the Internal Revenue Service collects. This change has nothing to do with the employer mandate, even tangentially. HHS is disowning eligibility quality control because pre-clearance is "not feasible" as a result of "operational barriers" and "a large amount of systems development on both the state and federal side, which cannot occur in time for October 1, 2013."
You've got to love that passive voice. It's true that coordinating and managing vast amounts of information from hundreds of millions of Americans and corporations, and monitoring compliance with more than 10,000 pages of fine-print Federal Register regulations so far, is hard to do. Yet that is the system Democrats installed when they passed the law, which is not supposed to be optional due to administrative incompetence.
HHS promises to develop "a more robust verification process," some day, but the result starting in October may be millions of people getting subsidies who don't legally qualify. This would mean huge increases in ObamaCare spending. Some of these folks could be fraudsters, much as 21% to 25% of Earned Income Tax Credits flow to people who aren't eligible, according to the Treasury inspector general. The same error rate for ObamaCare would amount to as much as $250 billion in improper payments in its first decade.
The irony in the case of ObamaCare is that liberal health policy is predicated on the notion that if Congress commands something on paper, it will happen in the real world. Architects Peter Orszag and Ezekiel Emanuel are still claiming against all evidence that their policy experiments in human behavior modification will yield huge cost savings.
Yet now we are discovering that Democrats passed a bill that is so large and convoluted that even they can't implement it in practice. So don't be surprised if millions of individuals decide they're eligible for the subsidies, or should be, and wait for someone eventually to say they aren't.
Liberals are also now claiming that the employer mandate and these eligibility rules were never important parts of ObamaCare. This is revisionist history, not least because the mandate and eligibility limits helped reduce the cost as measured by the Congressional Budget Office.
The revisionism is also false because every provision of ObamaCare is supposed to "solve" a problem created by some other provision of the bill. Kick out one of the struts like the business mandate and the whole apparatus becomes even more unstable. In the case of the lawless decision to shelve any income or employer insurance scrutiny, HHS's logistical challenges are real. But our bet is that the Administration is also using them as a pretense in a deliberate bid to make it much easier to join the exchanges.
That's because the health planners are terrified that enough healthy, low-cost people won't sign up and therefore the Affordable Care Act's strict regulations on underwriting and risk-pooling will blow up insurance markets. As more and more of ObamaCare tumbles, the Administration is resorting to anything that can salvage the goal of permanently expanding the U.S. entitlement state.
All of this fits with ObamaCare's entire bloody-minded history. Democrats were determined to make their rendezvous with the liberal destiny of government-run health care, so they imposed this debacle on the country on a partisan vote and despite public opposition. Now that they are discovering how difficult it is to remake one-sixth of the U.S. economy, they are rewriting the law as they go and telling Americans they have no choice but to live with the consequences.