House votes 235-191 to stop ObamaCare's insurance subsidies

The House has passed legislation aimed at preventing people from receiving health insurance subsidies under ObamaCare until a better system is put in place to verify who is eligible for those subsidies.

Members passed the No Subsidies Without Verification Act, H.R. 2775, in a 235-191 vote that saw support from five Democrats.

But like dozens of other bills from the House meant to tweak or repeal ObamaCare, this one also seems likely to go nowhere in the Senate. The White House has said the bill is unnecessary, and President Obama would veto it if it were presented for his signature.

The bill from Rep. Diane Black (R-Tenn.) is a response to a July regulation issued by the Department of Health and Human Services (HHS). That rule gives state-run health insurance exchanges some flexibility when examining whether people are qualified for insurance subsidies, which are tax credits that can be used right away to buy insurance.

Since it was issued, Republicans have said the rule would allow ineligible people to receive insurance subsidies, which would run up taxpayer costs. The GOP says no subsidies should be issued until a process is in place to verify everyone's eligibility.

"Because fraud and abuse have been rampant in just about every program that is administered by the Department of Health and Human Services, including Medicare and Medicaid, a certified verification system being in place prior to the implementation to the Affordable Care Act is critical," Rep. Michael Burgess (R-Texas) said during Wednesday debate on the bill.

"The President's strategy on the healthcare law is now: Trust, don't verify."

But the Obama administration says its July rule is being misinterpreted. The Centers for Medicare and Medicaid Services (CMS) say flexibility in the rule only applies to a small subset of people and that eligibility checks for those people will not be undermined.

Under the law, people are eligible for subsidies if their employers don't provide an approved healthcare plan and if their income levels are low enough. According to the CMS, the July rule will require exchanges run by states and the federal government to run an initial check on every applicant's income levels and employment status, using available government documents.

However, the rule includes flexibility for state-run exchanges on the question of further verification for people who claim their income is significantly lower than what it appears to be based on government data. Under the rule, states will have the option of trying to verify this lower income on some, but not all, of these people by using random sampling.

People who are randomly sampled will be subject to a more rigorous verification check. Those who are not randomly sampled could potentially receive subsidies even if they are not eligible, and Republicans seized on this possibility during today's debate.

"States can continue to audit whatever sample size they see fit, or simply not audit at all," Rep. Renee Ellmers (R-N.C.) said. Others agreed the system raises the prospect of improper payments and fraud.

However, the CMS argues, even if some ineligible people receive subsidies, the IRS can retroactively take them back the next year once an applicant's actual income level is known. House Democrats backed up this point during today's debate.

"If there's an inconsistency, the applicant pays back the excess," Rep. Frank Pallone Jr. (D-N.J.) said. "There is … 100 percent income verification and reconciliation on the back end."

House passage of the bill today likely means the end of legislative progress on the issue, given Senate and White House opposition. But Thursday's debate left little doubt that Republicans would continue to keep up pressure for the repeal and reform of ObamaCare.

Ellmers warned of the pending "economic disaster" that is looming for the United States when enrollment under the health insurance exchanges begins in just a few weeks, on Oct. 1.

House Republican Conference Committee Chairman Cathy McMorris Rodgers (R-Wash.) said the Obama administration's flexibility for state-run exchanges appears to be aimed at getting as many people using the health insurance exchanges as possible.

"This administration has made one thing clear: It will stop at nothing to ensure that 7 million people are enrolled in the exchanges in 2014 … and that subsidies are handed out to as many Americans as possible," she said.

After the vote, Senate Minority Leader Mitch McConnell (R-Ky.) praised the House.

"I commend House passage today of legislation that would bar the administration from providing taxpayer funding through ObamaCare until the Obama administration  establishes a system to verify the eligibility of people receiving a subsidy to prevent fraud and abuse," he said.

McConnell and Sen. Tom Coburn (R-Okla.) have sponsored similar language in the Senate, and McConnell said the change is needed in light of the Obama administration's poor track record in stopping payment fraud.

"Although I continue to support repealing ObamaCare and replacing it with commonsense alternatives that lower costs, today's House-passed bill, along with our Senate legislation, is a common-sense step to protect taxpayer dollars."

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