Federal government bureaucrats love health insurance. It’s almost like a religion. They believe in health insurance for its own sake. If you pay $500 a month for health coverage that you don’t use, that’s fine because someone else in your risk pool will use it. It’s like going to church. You should just do it and the feds encourage it.
Just think of it: SCHIP provides coverage for poor children. Medicaid provides coverage for low-income families. Medicare provides coverage for seniors. The Affordable Care Act expanded Medicaid to those with incomes formerly too high for Medicaid. Public subsidies for Obamacare plans extend to those solidly in the middle class. A half trillion-dollar tax subsidy (probably more nowadays) assists those with employer coverage. These are all federal programs to promote health insurance.
In the private sector economists mostly agree that employer-sponsored health coverage is a form of non-cash compensation. That is, your total compensation is based on your productivity and demand for your skills. Health coverage is a portion of your pay. If the employer contribution for your health coverage rises, your take home pay is constrained. Federal and state governments don’t see it that way. It’s their mistaken belief that every employee deserves generous health coverage despite the cost. To them, health coverage should just be one the costs of doing business and firms should not question it. That’s why the ACA mandated employee health coverage.
A while back the Government Accountability Office released a report finding that the federal employee health benefit plans are providing coverage to thousands of people who are not eligible for subsidized coverage. Think brothers, sisters, cousins, friends, etc. The Office of Personnel Management is responsible for federal employee benefits and administration. It’s like the HR for federal employees. The agency seemingly does not care that taxpayers are paying something like $3 billion a year in subsidies that enrollees are not eligible for. Politico gave some of the details:
For 12 years, a Department of Transportation employee fraudulently enrolled his sister and niece on his federal health benefits plan. He claimed the two were his wife and stepchild.
An equipment repair worker at an Army facility in Alabama kept an ex-wife covered for 14 years, and was caught only when he tried to add his new wife. And at the Department of Justice, an employee added a friend and her friend’s four children, asserting they were her family members.
Republican Senator Rick Scott of Florida plans to introduce a bill requiring the federal government to audit its members for eligibility. When he was Florida governor his administration conducted an audit of state employees and found about 3% of enrollees were ineligible. An audit in California found a similar proportion of enrollees (2.6%) were not eligible. About half of states have performed similar audits of state employees to verify all enrollees are eligible for subsidized health benefits. According to Scott:
‘OPM does not care about fraud, or they would do it. It’s not that hard,” said Scott, who requested the GAO report. “Companies do it all the time, and states do it all the time. It’s real simple to put a program in place to do it, so if you don’t do it, that means you support fraud.’
The problem is that the cost of an audit would come out of OPM’s budget, while the savings from kicking ineligible plan enrollees off the rolls would accrue to the agencies that provide ineligible benefits. An indication of how little the OPM knows about the scope of the problem is found in the following statement from Politico.
Esser’s office estimates that ineligible enrollees cost the federal health program between $250 million and $3 billion a year — calling the lack of accounting for improper payments “a persistent top management challenge” at OPM.
This is not a minor expense. In the anecdotes above the ex-wife whose ex-husband kept her on his insurance for 14 years cost taxpayers $150,000 in claims over the years. The man who claimed his sister and niece were his wife and stepchild cost the federal government $100,000 in premiums and claims. One worker who enrolled his son as a disabled dependent over the age of 26 cost the federal government more than $160,000, which included two stays in a drug rehab center.
It is surprisingly easy to sign up ineligible friends and extended family members for subsidized coverage through the federal employee health benefits program. There is no centralized program to check for eligibility and each agency is supposed to police their own employees. Scott believes it will require Congressional action to require OPM to force federal agencies to audit health plan enrollees for eligibility.
Politico: The billion-dollar health scam the federal government won’t stop
GAO report report