Audit: Health-care subsidies vulnerable to fraud

WASHINGTON - Government subsidies to help Americans buy insurance under the health-care overhaul may be vulnerable to fraud, a Treasury Department watchdog warned on Tuesday in the latest indication that troubles are far from over for President 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."

He acknowledged that other problems will likely arise, but "when they do, we'll fix those too."

Also Tuesday, the administration released a 50-state report saying that nearly 1.5 million people were found eligible for Medicaid during October. As website problems depressed signups for subsidized private coverage, the safety-net program for low-income people saw a nearly 16 percent increase in states that have agreed to expand it, according to the Department of Health and Human Services.

Obama pledged Tuesday that the health-care law won't be repealed "as long as I'm president." But the president has made changes administratively.

Last summer, the administration delayed for a year a mandate that large employers provide insurance to their workers. Last week, the administration said it was putting off the launch of a website for small businesses to purchase insurance for their workers until November 2014.

Obama has also asked state regulators to allow insurance companies to reissue canceled policies for next year, even if they don't meet all of the law's requirements.