By David Lawder
WASHINGTON (Reuters) - Online insurance marketplaces created under President Barack Obama's signature healthcare law have struggled to verify whether Americans who applied for government subsidies to purchase health insurance are actually qualified to receive them, a federal watchdog agency said on Tuesday.
The Department of Health and Human Services Office of the Inspector General said in two reports that some "internal controls" were ineffective in verifying eligibility at the marketplaces run by the federal government, California, Connecticut and some other states.
Applicants for subsidies must enter income data, Social Security numbers and other information into the online systems. The maximum household income allowed for a subsidy is four times the federal poverty level, or about $94,200 for a family of four.
"The deficiencies in internal controls that we identified may have limited the marketplaces' ability to prevent the use of inaccurate or fraudulent information when determining eligibility of applicants for enrollment in qualified health plans," the inspector general said.
The watchdog's reports mark the second potential setback in two days to the 2010 healthcare law. The U.S. Supreme Court on Monday limited its mandate to provide universal contraception coverage for women.
The Centers for Medicare and Medicaid Services, which administers Obamacare, said in a statement it was actively reaching out to consumers to verify information and "resolve inconsistencies to make sure that individuals and families get the tax credits and coverage they deserve and that no one receives a benefit they shouldn't."
The HHS inspector general's findings, dismissed by the White House as based on 'outdated information,' prompted fresh complaints from Republicans in Congress, whose attention in recent weeks had been redirected to other issues in the runup to November's mid-term elections.
"When Obamacare was passed, its chief architects told us they would have to pass the bill to find out what was in it," said Senator Orrin Hatch, the top Republican on the Senate Finance Committee. "Today's report confirms what we knew was not included: safeguards to protect hard-earned taxpayer dollars from an incompetent bureaucracy."
The California marketplace had difficulties verifying citizenship and lawful presence, while the federal marketplace had difficulty verifying Social Security numbers, the inspector general said.
A companion report found that the federal and some state insurance marketplaces could not, in their early months of operation, resolve most inconsistencies between applicants' self-supplied information and data received through other federal sources, most commonly citizenship and income levels.
The federal marketplace was unable to resolve 2.6 million of 2.9 million inconsistencies as of the first quarter of 2014, because of systems not fully operational from October through December last year.
White House Press Secretary Josh Earnest dismissed the inspector general reports as being based largely on "outdated information" from late 2013, when the Obamacare website was struggling to function properly.
He said more work needs to be done to resolve inconsistencies, such as slight variations on a person's name between federal databases, but these do not necessarily indicate problems with applications that have been submitted.
(Reporting by David Lawder, with; additional reporting by Jeff Mason; Editing by Gunna Dickson)