OC eligibility verification: The canary in the coal mine?

Let’s see ….

The original ObamaCare law said that an insurance applicant’s eligibility should be verified before they’re granted a Federal premium subsidy.

Sounds easy enough.

But then, out of the blue, President Obama modifies the law on-the-fly with an Executive Order to fugetaboutit..

You know, just go by the honor system.


Anybody remember the “liar loans” that played a central role in the financial crisis?

Then the budget brouhaha gets settled by reinstating the original law’s requirement that an applicant’s eligibility be verified before a subsidy is granted.

Essentially, eligibility is based on income.

Which led my wife to ask me a question that cuts to the core of the ObamaCare systems issue.

  • Important tech note: It is a “systems issue” and not a “web site issue” as the media likes to call it.  That’s significant, because it’s relatively easy to fix a web site issue with code tweaks … a systems issue is much more challenging … especially if the “system” consists of a bunch of decades-old “batch-based” legacy systems that are cobbled together and asked to operate in real-time.

My wife’s question: “Why is verifying income so hard?

If people have to submit their Social Security numbers when applying for ObamaCare, can’t they just ask the the IRS system how much income the people make ?”

Good question.


But, a question that opens up a veritable Pandora’s box. …

First, there’s a conceptual design issue.

ObamaCare subsidies are supposed to be based on current earnings levels, not past earnings levels.

That is, a person applies today for ObamaCare insurance coverage in 2014.

His subsidy is based on 2014 income.

What Donald Rumsfeld would call a “known unknown”.

An unverifiable number until the end of 2014.

So, the applicant is asked to provide an estimate of their next year’s income.


Question: How to verify that number?

A couple of ways to tell if the person’s estimate is in the ballpark.

If they claim little or no income, verification can be done by checking the  food stamps system … and trusting that the government’s field bureaucrats verified eligibility before issuing an EBC (or ObamaPhone).

Or, their social security number can be banged against the IRS database to see if they filed a return last year … and, if they did, how much income they reported.

  • Technical point: For many applicants there probably isn’t a return on file since very  low earners don’t have to file returns. 

Or, their social security number can be banged against the Social Security database to see if they’ve paid any payroll taxes this year,

  • Technical point: That number, annualized and projected out, is probably the most current data point that should be available.

Let’s summarize: an applicant has to estimate next year’s income — a known unknown that can be tested (not really “verified”) by fetching data from the IRS database or the Food Stamp data base or the Social Security data base.

Imprecise (by definition), but directionally well-intended …. and possibly enough to scare some people from cheating.

Simple enough, right?

Just fetch data from 3 existing government data bases.


What if the ObamaCare system can’t do that relatively simple data-fetching task?

Answer: That spells systems trouble … not web site issues.


I was surprised when the GOP’s last stand in the budget battle was for income verification.

Frankly, I think they were just picking a face-saving populist issue that – though they probably didn’t realize it – might turn out to be a pivotal issue.

I was even more surprised that Obama said OK to the provision.

From his 50,000 feet perch, I doubt he realized what he was agreeing to … and probably just concluded that defending non-verification would look downright silly … or, he’d have to admit that the systems didn’t work … that all these databases weren’t really linked.



My view: income verification is a coal mine canary.

Here’s what I mean.

My wife is right.

If the databases are linked together the way they’re supposed to be, fetching somebody’s  info from standard government data bases (IRS, Social Security, EBC) should be one of the easiest data flows.  All under Fed control.

If income verification can’t be done in real-time, I can’t imagine how any other info can be grabbed from, say, external insurance company databases.


That, my friends is why I think that it won’t just take “a plane load of Silicon Valley techies a week” to fix the ObamaCare systems issues.

The fix will be more like a Manhattan Project.

The income verification canary is gasping in the mine … indicating, to me, way deeper problems.


So, how will Obama handle the situation?


He’ll just ignore the eligibility verification part of the budget compromise.

After all, income verification was part of the original ObamaCare law and he chose to give a disregard order.

My bet: he’ll do it again … just Exec order a stand-down … ignore what he likes to call “a law of the land”.


P.S. If the system can’t verify incomes, do you really think that it’ll be able to ID insurance scofflaws, track them down and collect fines?

I’m betting the under on that one.

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