Waste and Fraud Rampant in Still-Existent ‘Obamaphone’ Program

(Joshua Paladino, Liberty Headlines) The United States Senate Committee on Homeland Security and Governmental Affairs hosted a hearing about the FCC’s Lifeline Program, commonly referred to as the “Obamaphone” program.

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The Universal Service Administrative Company, which is an organization under the Federal Communications Commission (FCC), operates the Lifeline program.

Vickie Robinson, acting CEO of the USAC, said her organization has started the National Lifeline Accountability Database, which aims to prevent waste and fraud, including in the famously-abused “Obamaphone” program.

“The NLAD is a database of Lifeline subscriber information collected and submitted by the service providers,” she said. “Service providers and USAC use the database to perform name and address verification, duplicate checking, and management of enrollment, disenrollment, and transfer of subscribers between Lifeline service providers.”


Before the database people could receive multiple subsidized phones from the government. National Review reported on this wasteful policy in 2013. NLAD found 2.5 million fraudulent cases of people who received multiple subsidized phones.

NLAD, which began in 2015, dropped costs for the Lifeline program from $2.2 billion to $1.5 billion, according to Robinson.

FCC Chairman Ajit Pai said one Lifeline subscriber received over 10,000 subsidized phones, which amounted to a $90,000 profit—and taxpayers paid the bill. He said 1.2 million people, or 36 percent of Lifeline subscribers, likely filed fraudulent claims to enroll in the program.

Participants must be on Medicaid, Supplemental Nutrition Assistance Program (SNAP),
or Supplemental Security Income (SSI) to qualify. But the Government Accountability Office (GAO) could not confirm over a third of the participants’ claims that they were on one of these programs.

The GAO found an additional 6,000 people who were enrolled in the program, but were found to be deceased at least one year prior to their participation.

Pai said the FCC will direct USAC to begin another verification process, in addition to NLAD, to ensure taxpayer money is used responsibly. It’s called The National Verifier.

“The National Verifier will take on the responsibility of determining subscriber eligibility, making it more difficult for those who would defraud the program from abusing the eligibility process to claim ineligible or duplicate subscribers,” he said. “The National Verifier will also use federal and state data sources to automate eligibility checks, which both improves accuracy and minimizes administrative expenses.”

The NLAD has corrected fraud and waste that was already in the system. The National Verifier will ensure those who claim eligibility for the Lifeline program actually meet the requirements.

Medicaid expansion has made the Lifeline program available to more Americans. Now that families and individuals at or below 135 percent of the Federal Poverty Guidelines are eligible for Medicaid, they’re also eligible for government-provided communication services.

Seto Bagdoyan, director of the Forensic Audits and Investigative Service, said the FCC and USAC have been ineffective stewards of taxpayer money.

“FCC’s and USAC’s limited oversight of important aspects of program operations further complicates the control environment—heightening program risk. We are encouraged by FCC’s recent steps to address weaknesses we identified, such as the 2016 order establishing a National Verifier, which, if implemented as planned, could further help to address weaknesses in the eligibility-determination process,” he said.

For some in Congress, these changes are not enough to justify a federal program that has wasted millions of dollars.

Rep. Austin Scott (R-GA) introduced legislation to end the Lifeline program in July, 2017.

“Hardworking American taxpayers are already overburdened and should not be forced to pay for a program that has vastly expanded beyond its intended scope and is riddled with waste, fraud, and abuse,” Scott said. “My bill will reform the Lifeline Program and restore it to its original purpose of providing landline services and prohibit Universal Service support for mobile services. In order to promote government accountability, cut government fraud and waste, and protect consumers from further increases to their phone bills, the Lifeline Program’s free cell phone plans should end.”