Health Insurance Exchange: Income and Insurance Verification Delayed Until 2015

While many of us were enjoying a long holiday weekend, the Obama administration chose the Friday after Independence Day to release a major announcement pertaining to the Affordable Care Act.  According to the Washington Post, income and insurance verification requirements will be significantly scaled back until 2015.

The delay comes in an effort to implement verification systems on an electronic basis.  With the technology unavailable, the federal government will rely largely on self-reported data in the first year of the Affordable Care Act’s implementation.  Without person-by-person verification, there are numerous opportunities for fraud to occur.   For example, the exchanges where consumers will actually purchase the coverage were previously obligated to verify that an applicant didn’t have coverage elsewhere that would disqualify them from eligibility.  With no verification in place, we’re likely to see applicants who lie on their application in order to take advantage of a government subsidy that would be otherwise unavailable to them.  This would cause financial projections on costs of subsidies and number of enrolled members to be too low, throwing the budget out of balance.  It would also cause unforeseen stress on the exchange system’s administration capacity as well as the individual health insurance carriers’ network of doctors.

The government will audit a “statistically significant” sample of applicants, and verify their submitted financial information against government records.  However, for those who are not audited, they will accept a self-reported attestation- also known as “the honor system.”

Combined with the news that the employer mandate to offer coverage has been delayed until 2015, this is not heartening news for the Affordable Care Act and its supporters.  While removing these regulations and failsafes will make implementation easier this year, it is likely to be a long term detriment to both the system and its users.