EDITORIAL: Democrats fight to preserve fraud-riddled subsidies

A new audit reveals how Democrats shut down Washington in October to preserve a temporary subsidy program that is likely rife with fraud and abuse.

The latest government closure ended Nov. 12 after 43 days, making it the longest in U.S. history. Democrats in the Senate voted a dozen times to keep the doors locked in an effort to pressure Republicans to extend health care subsidies available under the Affordable Care Act and enacted as a short-term measure to cushion the blow of the pandemic, which has long since passed.

The move was a tacit admission that Obamacare has utterly failed to control health care costs. But the larger story is how this subsidy — which cost about $125 billion in fiscal 2024 — has enabled massive waste and encouraged fraud.

On Wednesday, the Government Accountability Office released the preliminary results of an “ongoing review” of the advance premium tax credit program under the ACA. The results were an embarrassment. For the 2025 application year, the GAO created 20 fake claims — backed up by fictitious documents, including invalid Social Security numbers or phony income data — yet only two were flagged. The rest were approved for subsidies that cost more than $10,000 a month in total.

There was little effort to verify citizenship. There was also evidence that Social Security numbers were used more than once to obtain coverage and that millions in subsidies went to Social Security recipients who had died.

“Preliminary results from our ongoing work indicate weaknesses” in the Centers for Medicare &Medicaid Services fraud risk management in the tax credit program, the review found. “Specifically, although CMS assessed APTC’s fraud risks in 2018, the agency has not updated its assessment despite changes in the program and its anti-fraud controls.”

Indeed, the problems are longstanding. There are several pending federal cases involving agents and brokers enrolling consumers in the ACA marketplace by using false documents. “Such practices can result in wasteful federal spending” ACA subsidies “for enrollees who are not eligible,” the GAO reports.

The report is a “smoking gun that shows how this broken system ... has led to the federal government shoveling tens of billions of tax dollars to insurance companies through identity fraud,” Jason Smith, R-Mo., the chair of the House Ways and Means Committee, told Politico.

Yet Democrats still insist that Republicans extend the “temporary” subsidies, which are available to individuals earning 400 percent of the poverty line. The GOP should resist creating another eternal entitlement at a cost of $350 billion over the next decade. If Republicans lack the will to stand firm, they should at least reform these programs with an eye on tightening eligibility requirements and making it more difficult for fraudsters to loot the Treasury.