Published on July 8, 2013
On Friday, the Obama administration dropped another health care implementation bombshell.
In a 606-page regulation, issued the Friday after July 4, the administration announced that income and employment verification in the state-run exchanges in 2014 will be based on the “honor system.” That is, the state exchanges will not be required to secure independent verification of the household incomes of the applicants, nor will they have to track down whether or not applicants were offered qualified coverage by their employers. On both counts, the state exchanges can simply accept whatever is claimed by the applicants as accurate, and then pay out subsidies accordingly.
This announcement is another indicator—as if we needed one—of the complete fiasco that is Obamacare implementation.
The application process was not supposed to work this way. The administration has had three and a half years to build the “data hub” that was supposed to be the repository of real-time income information that the state exchanges would tap to administer benefits. The Department of Health and Human Services has spent hundreds of millions of dollars on contracts and federal personnel to build the data hub. Now, at the eleventh-hour, in a regulation they hoped no one would notice, the administration announces that, due to the large amount of “systems development” work necessary to pull this off (you think?), the verification system they were telling everyone for months would be ready on time is now, well, not ready on time, with no prospect that it ever will be operational.
There is no excuse for this whatsoever. The administration had more than enough time to do this, if it could be done at all. The problem is a combination of sheer incompetence and liberal blindness to the limits of the capacities of the federal government.
Unfortunately, the victims of the bungled implementation of Obamacare will be taxpayers. The administration’s solution to the problem is to pretend that the income and employment verification system wasn’t really needed at all in 2014, and that applicant “attestation” will suffice. This approach serves the administration’s interests in two ways. First, it downplays the political significance of what was announced. The administration is trying to portray the change as a small adjustment in an otherwise inevitable implementation of the law when what was announced completely discredits what the administration had been telling everyone for months. The real story here is that the exchange roll-out has reached the point of administrative collapse, and the administration is doing everything it can to hide that fact.
Second, moving to the “honor system” is consistent with the administration’s larger objective at this point, which is to salvage Obamacare by shuffling as many people as they can into the subsidized insurance program. Hence the outreach to professional sports leagues, librarians, and others to help publicize enrollment in Obamacare. The abandonment of income verification allows the administration and the states to move to a “sign ‘em up now, answer questions later” approach, with the likelihood that erroneous payments made in 2014 will be gone forever. Why wouldn’t the administration find a way to waive collection of overpaid subsidies? They’ve waived everything else that is inconvenient.
This latest announcement from the administration, along with the delay of the employer mandate, makes it clear that now is the moment for the House GOP to begin fighting back. The Obama administration has already delayed the employer requirements for a year. How could Democrats possibly oppose putting that delay into statute, which is the only real way to relieve employers of their obligations? And why should the individual mandate remain in place in 2014 when the employer mandate has been delayed? More fundamentally, why should the exchanges be allowed to begin signing up people for coverage in 2014 when systems are not in place to protect taxpayers from waste and fraud?
There’s a political opening for the GOP to begin making the case that Obamacare is failing, as the party said it would from the beginning. At a minimum, the utter collapse of the implementation process cries out for a year-long delay, before real and perhaps irreversible damage is done.
James C. Capretta is a senior fellow at the Ethics and Public Policy Center.