A man fills out an information card during an Affordable Care Act outreach event. (Reuters/Jonathan Alcorn)
The Senate’s deal to reopen the government and extend the debt limit reportedly contains a small tweak to Obamacare—a tougher income-verification process for people receiving subsidies to purchase insurance through the new exchanges. Depending on the final language, the change could complicate the rollout of the health law, or be merely symbolic.
Reports suggest the latter. Specifically, Health and Human Services Secretary Kathleen Sebelius will have to certify that an income-verification system is in place before subsidies can be issued on January 1. Since the exchanges already use tax records, Social Security and employers’ reports to cross-check self-reported data, it should be fairly simple for her to do so. Sometime in the next year, the inspector general will conduct an audit of the system to ensure that it’s working.
Democrats and the White House were quick to point out that the change was not a concession. “We’re fine with it,” White House spokesperson Jay Carney said this afternoon. “The income verification provision…was negotiated by Senate Democrats and Senate Republicans and is a modest adjustment to the existing Affordable Care Act.”
Income verification is already part of the ACA, but this summer Republicans seized on news that some rules would be delayed until 2015. HHS plans to rely on self-reported earning figures to determine applicants’ eligibility for subsidies, checked against IRS and Social Security data. For the first year, the agency would only audit a “statistically significant sample” of individuals who reported incomes at least 10 percent below what federal records indicated. Beginning in 2015, each consumer reporting a significantly lower income would be audited. The delay applied only in states running their own insurance marketplace, not in the thirty-four states in which the federal exchange will operate.
In July, Republicans rolled an income-verification bill introduced by Tennessee Representative Diane Black into the larger effort to derail the health law. It passed the House in September, marking that chamber’s forty-first vote to repeal or undermine the ACA. At the time, minority leader Nancy Pelosi said the bill would “drive up out-of-pocket healthcare costs for the middle class and delay health coverage for millions of Americans.”
One of the biggest problems with the House bill was that it required not only the HHS secretary but also its inspector general to certify the accuracy of the verification process before subsidies could be issued. This could have delayed implementation: as the office of the IG informed Congress, it can’t evaluate whether verification has been “successfully and consistently” implemented until the subsidies have been given out and there is something to audit.
Reportedly, the agreement in the Senate does not require the IG to conduct its assessment until several months after subsidies begin to flow on January 1, so it won’t have any effect on the rollout. Judy Solomon, the vice president for health policy at the Center on Budget and Policy Priorities, told The Nation that pushing the IG audit back would ease the concerns she raised last week about the verification measure.
Still, income verification reprises the idea that Americans receiving government assistance are deadbeats bent on cheating the system. “Millions of Americans who claim to be eligible for a taxpayer-provided subsidy might not be,” Black wrote in National Journal with Tom Coburn, who introduced companion legislation in the Senate. “This reckless ‘honor system’ would result in the administration’s doling out billions of dollars in subsidies without requiring any form of verification.”
Never mind that this is standard practice. For example, the IRS audits only a fraction of taxpayers each year to make sure they really deserve the credits they claim. This year, in fact, the IRS will audit at least 18 percent fewer large corporations than it did last year.
Meanwhile enormous subsidies continue to prop up oil, gas and big ag without “verification” that such handouts are warranted. Corporations profit even more by rigging the tax rules, and cheaters are subject to increasingly lax oversight. For example, as of February the SEC still had not been given the resources needed to conduct its oversight duties as outlined in Dodd-Frank. As Michael Hiltzik wrote in the Los Angeles Times, “the pattern has always been that big shots and fat cats skate, while the little guys have to show every penny.”
Yesterday Representative Alan Grayson called demands for beefed-up income verification “an effort analogous to the Republicans’ voter suppression efforts: now they’re getting into health suppression. They’re trying to do whatever they can to block people who do qualify…from getting that health coverage by throwing up bureaucratic roadblocks in their way.” Grayson said this afternoon that he hadn’t heard anything new about the requirement, and hadn’t changed his position.
But as long as the income verification measure doesn’t actually stop the insurance marketplaces from operating effectively, it’s hard to see it as any kind of win for the GOP.
Check out the latest news on the debt-ceiling negotiations at The Nation’s live blog.