Victoria Knight
The concept that Affordable Care Act marketplaces are riddled with fraud has turn out to be a significant speaking level amongst Republicans, as lawmakers in Congress argue about whether or not to increase the improved tax credit which are serving to offset the price of well being care market protection for low- and middle-income individuals. Those ACA subsidies expire on the finish of the yr and have turn out to be a flash level within the authorities funding showdown.
“The tax credits go to some people deservedly. And we think the tax credits actually go to a lot of waste and fraud within the insurance industry,” stated Vice President JD Vance throughout a recent interview on CBS News. “We want to make sure that the tax credits go to the people who need them.”
Key to the Republican argument of widespread fraud is a report published in August by the Paragon Health Institute, a Republican-aligned assume tank. The report focuses on “phantom enrollees” within the ACA marketplaces.
Paragon president Brian Blase stated these “phantom enrollees,” who don’t use any medical care in a yr, exceed the odds of “what you would expect in a normal, functioning health insurance market.”
Blase and his crew say they’ve quantified the proportion of zero-claim enrollees within the ACA market by analyzing Centers for Medicare & Medicaid Services data released in August.
This highlights one of many central points with the CMS information: It tracks the variety of plan enrollments reasonably than particular person enrollees.
The federal information that Paragon analyzed may depend enrollees twice in the event that they’ve switched plans in the course of the yr, stated Cynthia Cox, a vice chairman and the director of the Program on the ACA at KFF, a well being info nonprofit that features KFF Health News.
Per that information, in 2021, the proportion of enrollments with none medical claims was 19%. That share jumped to 35% in 2024.
To Blase and Paragon, this enhance in zero-claim enrollments is proof of fraud. It signifies, they are saying, that rogue insurance coverage brokers are signing up individuals who don’t exist, don’t qualify, or produce other insurance coverage and don’t want ACA protection.
“Basically, what happened is you had insurers benefit, brokers benefit financially, and just massive numbers of people got put on the program,” Blase stated. That’s the place these phantoms are available. “They have no idea that they’re enrolled, and, as such, they use no medical care.”
In 2021, former President Joe Biden signed into regulation the American Rescue Plan Act, which included enhanced ACA subsidies that made plans out there at low or no value to sure low-income people and expanded eligibility for subsidies to some middle-income individuals. Those credit have been prolonged via 2025 as a part of the Inflation Reduction Act, signed in 2022.
News stories show how simple it might be for insurance coverage brokers in sure states to signal individuals up for zero-cost ACA insurance coverage, unbeknownst to the customers. The Department of Health and Human Services has tried to crack down on these fraudulent practices.
But well being coverage specialists and analysts have cautioned towards studying too deeply into the numbers of zero-claim enrollees.
“It’s not that he’s wrong, but I think he’s overinterpreting,” stated Michael Cannon, director of well being coverage research on the libertarian Cato Institute, of Blase’s evaluation.
Cox stated there’s proof that plan-switching has elevated, due partially to prolonged open enrollment intervals. Increased plan-switching may make the variety of individuals being double-counted greater within the federal information and enhance the proportion of zero-claim enrollees through the years. Some enrollees additionally could have been on an ACA plan for less than a part of the yr, which might make them much less prone to make a declare.
“We’re not trying to argue there is no fraud. It’s a real thing. But the question is, how big of a scale is this problem?” Cox stated. “Just suggesting that anyone who’s not using health care is a fraudulent enrollee — that’s not true. Plenty of people don’t use health care.”
It’s not unusual for wholesome individuals in an insurance coverage market to not use their insurance coverage in a given yr, in accordance with well being coverage specialists. And with the improved ACA subsidies, extra individuals signed up for market protection. Enrollment information reveals that it made the marketplace population younger, and youthful enrollees could also be much less seemingly to make use of their insurance coverage. A recent report discovered that every yr from 2018 to 2022, a mean of 23% of enrollees in employer-sponsored plans didn’t use their medical health insurance.
“Somehow the idea that people not using health insurance is some sort of a problem — it might be. But in principle it isn’t,” stated Joseph Antos, a well being coverage knowledgeable and senior fellow emeritus on the right-leaning American Enterprise Institute. “The point is that for insurance to work, you need some people who are not making claims on the insurance.”
The foremost commerce associations for insurers and hospitals, AHIP and the American Hospital Association, have additionally disputed Paragon’s characterization of the federal information and even revealed blog posts breaking down their arguments. AHIP pushed again on the concept that the insurance coverage business is cashing in on the improved subsidies by stating that present regulation caps well being plan earnings.
Paragon was began by Blase in 2021 and has turn out to be extensively influential in Republican well being coverage circles. Alumni of the group are staffers within the Trump administration and in House Speaker Mike Johnson’s workplace, so it follows that the group’s takeaways would turn out to be Republican speaking factors.
It’s additionally not new for the GOP to say that authorities applications are stuffed with fraud. During the negotiations over the One Big Beautiful Bill, Republican lawmakers insisted Medicaid wouldn’t be lower to pay for the tax cuts, however that “waste, fraud, and abuse” within the well being program could be eradicated.
Now, the ACA is heart stage within the ongoing federal authorities shutdown, with Democrats pushing for Congress to increase the present ACA subsidies, that are set to run out on the finish of the yr. And fraud, once more, is a centerpiece of the argument for Republicans. Democrats take a distinct view on the quantity of fraud in this system, as an alternative emphasizing how the subsidies’ expiration will enhance insurance coverage premiums.
“It’s become a boondoggle. It’s a subsidy for insurance companies,” Speaker Johnson stated of the ACA subsidies at a shutdown press conference final week. “When you subsidize the health care system, and you pay insurance companies more, the prices increase. That’s been the problem.”
KFF Health News senior correspondent Julie Appleby contributed to this report.
KFF Health News is a nationwide newsroom that produces in-depth journalism about well being points and is likely one of the core working applications at KFF—an unbiased supply of well being coverage analysis, polling, and journalism. Learn extra about KFF.
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