GAO undercover sting signs up fake people on Obamacare

WASHINGTON, July 23 (UPI) -- A report that found it possible to use fake information to register and qualify for subsidized insurance on the federal healthcare exchange has sparked a new wave of criticism from Republicans.

The Government Accountability Office released preliminary findings of an investigation in which it was able to use false documents to sign up to qualify for insurance and income-based tax credits in 11 of 12 attempts.

The single denied applicant was rejected because it did not list a social security number.

"The contractor told us it does not seek to detect fraud and accepts documents as authentic unless there are obvious alterations," the agency said in its report. "As of July 2014, GAO continues to receive subsidized coverage for the 11 applications, including 3 applications where GAO did not provide any requested supporting documents."

At a hearing Wednesday, the Republican Ways and Means Oversight subcommittee members who commissioned the report said the findings were "deeply troubling."

"Whether it's Republican or Democrat, we cannot tolerate this level of fraud and abuse," said subcommittee Chairman Charles Boustany, R-La.

But Seto Bagdoyan, acting director of the GAO's investigative arm, warned that the findings are preliminary, and are not meant to be taken as evidence that fraud is occurring in this manner, but rather ought to be used as a way to identify weaknesses in the process.

Democrats on the committee argued that not only were Republican concerns over the findings premature, but were a show of faux concern over a law they wish to see disappear.

"Fifty-two times my colleagues on the other side of the aisle have tried to repeal the act ... so it's interesting to hear their concern," Rep. Joseph Crowley, D-N.Y., said.

Crowley said that if indeed there were criminals attempting defraud the exchanges, the GAO's methods would be a poor way to do it: Not only do insurees never see the tax credit (it gets paid directly to the insurance company), but tax forms at the end of the year would turn up the disparity between what people report and their actual information.

"People underestimate their income, and for those inconsistencies, they are later identified and have to pay it back," he said.

According to the report, investigators initially tried to use HealthCare.gov to sign up fake accounts but were later denied. They found more success after being instructed to apply over the phone or on insurance applications.

Republicans have called for all subsidies to be suspended until the verification system has been improved. The report comes in the same week as federal appeals courts came to opposite conclusions about whether the subsidies were even legal in states that refused to set up their own healthcare marketplaces.

GAO preliminary report on subsidies testing