Health Subsidies May Be At Risk Of Fraud

By Stephen Ohlemacher

The Associated Press

WASHINGTON

Government subsidies to help Americans buy insurance under the health care overhaul may be vulnerable to fraud, a Treasury Department watchdog warned Tuesday in the latest indication that troubles are far from over for President Barack Obama's signature legislation.

The rollout of the law has been hurt by canceled policies and problems with the federal website used by people to enroll in health plans, causing political headaches for the White House and for Democrats in Congress. The new problems concern subsidies that are available to low- and medium-income people who buy insurance through state-based exchanges that opened in October.

Those subsidies are administered by the Internal Revenue Service in the form of tax credits, and that's where the trouble arises.

"The IRS' existing fraud detection system may not be capable of identifying (Affordable Care Act) refund fraud or schemes prior to the issuance of tax return refunds," said the report by J. Russell George, the Treasury inspector general for tax administration. "The IRS reported that the long-term limitations of its existing fraud detection system include its inability to keep pace with increasing levels of fraud," the report said.

Sounding more upbeat, acting IRS Commissioner Danny Werfel said, "The IRS has a strong, effective system in place for administering the Premium Tax Credit. We have a proven track record of safely and securely transmitting federal tax information and we have a robust and secure process in place to deliver this important credit for taxpayers."

The president had a sunnier view, too. Seeking to regroup from the law's disastrous rollout, Obama said Tuesday the government website is working well "for the vast majority of users."

Also Tuesday, the administration released a 50-state report saying that nearly 1.5 million people were found eligible for Medicaid during October.

Website's well?

President Obama says it's working "for the vast majority of users."