Good morning and welcome to this morning’s hearing on the integrity of insurance premium subsidies under the President’s health care law. Last month, this Subcommittee and the Subcommittee on Health held a hearing that showed the Administration’s failure to implement effective eligibility verification systems would result in billions of dollars in improper payments going out the door, and unexpected tax debts for families across America. This morning, we turn to the question of whether the Federal Exchange has sufficient controls in place to verify income and identity, including Social Security Numbers, names, and other information.

On September 12 of last year, Chairman Camp, Senators Tom Coburn and Orrin Hatch, and I wrote to Comptroller General Gene Dodaro asking that the Government Accountability Office conduct testing to determine whether the Administration had in place appropriate internal controls to prevent fraud and abuse in the health insurance exchanges. We asked that he do this through the GAO’s Forensic Audits and Investigative Service – a team of forensic audit and investigative professionals who conduct special investigations and fraud assessments.

To test these internal controls, GAO went undercover and created 18 fictitious identifies to apply for insurance subsidies online, over the phone, and in person. When the GAO applied for premium subsidies online or over the phone with fictitious names, Social Security Numbers, and documents, it succeeded over 91 percent of the time. When the GAO went to seek help from taxpayer-funded assisters, five times out of six they were turned away or unable to find help. When the GAO sent in fake documents to support their applications, federal contractors accepted those documents. Sadly, this should not be terribly surprising.

Time and time again, the Administration has chosen to either ignore the law, or when it does implement the law, it does so incompetently. The Administration decided the employer mandate would harm its political and electoral interests, so it delayed the mandate. The Administration found that the words of the law would prevent it from implementing federal subsidies in the way it preferred – so it ignored the law, as the D.C. Circuit ruled yesterday. When the Administration sought to implement the Federal Exchange and create Healthcare.gov, the website crashed spectacularly. When the Administration began issuing billions of dollars in subsidies, we have found that it did so without regard to protecting those taxpayer dollars from improper payments.

This is not simply a question of whether one likes the President’s health care law or the way his Administration has gone about implementing it. The question is whether the Administration is being a good steward of taxpayer dollars and is putting in place adequate controls to protect those dollars from fraud, waste, and abuse. The history of the health care law’s implementation suggests the answer is no.

Today, we hear from Seto Bagdoyan, the Acting Director of the Forensic Audits and Investigative Service, on GAO’s preliminary findings in this matter. I thank him and the GAO for their work and look forward to his testimony.

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