The Trump Administration cancelled the ACA health plans for more than 750,000 enrollments that are suspected of being fraudulent. Democrats immediately criticized the move. For instance, former House Speaker, Nancy Pelosi wrote on social media that “[u]sing the false pretext of fighting fraud to strip Americans of their healthcare is as cynical as it is cruel.” However, it was long overdue. The following explanation is from The New York Times:
The Trump administration asked health plans to verify eligibility for nearly 1.2 million people who were signed up by a broker and missing a Social Security number or immigration papers, according to a spokesperson for the Centers for Medicare and Medicaid Services, which oversees Obamacare.
Officials then narrowed that list to people who had not filed insurance claims, had no record of contacting the insurer about the coverage and whose premiums were fully covered by government subsidies.
Obamacare enrollees had 30 days to respond to their insurers. Those who were flagged under the criteria and did not respond to their health plan’s outreach had their coverage canceled.
Officials plan to investigate another 440,000 people whose applications are also missing some essential information. Yet, the total number effected – around 1.2 million enrollees – is just over half of 2.3 million ineligible enrollees the administration estimates exist.
An important question is why did it take the government so long to act? We are almost through with September, 75% of the 2026 plan year. Program integrity should have been built into the Affordable Care Act from day one. The Biden Administration decertified 200 brokers it believed were enrolling people without their knowledge. Some of those brokers were switching people from plans they originally chose to another plan to get commissions. More from NYT:
“We absolutely found that there was a fair amount of unauthorized activity,” said Ellen Montz, who oversaw the Obamacare marketplaces for the Biden administration. She described an uptick in fraudulent enrollments that started in 2024, and said that in response, the Biden administration cracked down on brokers and began requiring more documents during online enrollment.
The Trump Administration recertified and then again removed some of brokers suspected of inappropriate activity. It also begs the question of what happened to the unscrupulous brokers who enrolled ineligible people and why the marketplace did not automatically reject the applications. Dr. Oz enacted a 6-month moratorium on new brokers selling ACA plans and pointed to a pair of Florida brokers who were found guilty of bribing homeless people to enroll in ACA plans. Both brokers were sentenced to 20 years in prison.
Despite evidence of fraud and common-sense movements to prevent it, some critics argue the administration is heavy handed. An Obamacare advocate from the Kaiser Family Foundation told NYT:
“There is widespread agreement that unauthorized enrollments should be canceled,” she said. “The question is whether these were all indeed unauthorized enrollments and whether this was the appropriate process for determining whether an enrollee was legitimate or not.”
It is hard to overestimate the lengths to which supporters of federal welfare programs are willing to tolerate fraud, believing they are protecting the programs. While conservative think tanks like the Paragon Institute estimate up to one-quarter of ACA enrollments were improper, left-of-center advocacy organizations worry that enforcing commonsense measures is heavy handed. There have been numerous examples over the past year of rampant fraud committed by bad actors. Yet, states ignored it and now criticize the Administration for aggressively routing out fraud.
Obamacare subsidies that fully pay premiums vary by age and location, but for an average 40-year-old enrollee the cost is about $625 a month, or about $7,500 a year. It makes sense that the government should scrutinize applications, requiring absolute compliance with eligibility requirements before doling out $7,500 to several million people who may not exist. Supporters of the Affordable Care Act should welcome efforts to protect the financial integrity of the program.
Read more at New York Times: Trump Officials Eject 750,000 From Obamacare Markets, Claiming Fraud
I should have added that the administration estimates a savings of $2.2 billion from removing 750,000 phantom enrollments. Simple math suggests a savings far higher if a couple million bogus enrollments are prevented.