The concept Inexpensive Care Act marketplaces are riddled with fraud has change into 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. These ACA subsidies expire on the finish of the 12 months and have change into a flash level within the authorities funding showdown.
“The tax credit go to some individuals deservedly. And we predict the tax credit really go to a variety of waste and fraud throughout the insurance coverage trade,” mentioned Vice President JD Vance throughout a latest interview on CBS Information. “We need to be sure that the tax credit go to the individuals who want them.”
Key to the Republican argument of widespread fraud is a report printed in August by the Paragon Well being Institute, a Republican-aligned assume tank. The report focuses on “phantom enrollees” within the ACA marketplaces.
Paragon president Brian Blase mentioned these “phantom enrollees,” who don’t use any medical care in a 12 months, exceed the odds of “what you’d count on in a standard, functioning medical insurance market.”
Blase and his group say they’ve quantified the proportion of zero-claim enrollees within the ACA market by analyzing Facilities for Medicare & Medicaid Companies knowledge launched in August.
This highlights one of many central points with the CMS knowledge: It tracks the variety of plan enrollments somewhat than particular person enrollees.
The federal knowledge that Paragon analyzed might rely enrollees twice in the event that they’ve switched plans in the course of the 12 months, mentioned Cynthia Cox, a vice chairman and the director of the Program on the ACA at KFF, a well being data nonprofit that features KFF Well being Information.
Per that knowledge, in 2021, the proportion of enrollments with none medical claims was 19%. That share jumped to 35% in 2024.
To Blase and Paragon, this improve 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.
“Principally, what occurred is you had insurers profit, brokers profit financially, and simply huge numbers of individuals obtained placed on this system,” Blase mentioned. That’s the place these phantoms are available. “They do not know that they’re enrolled, and, as such, they use no medical care.”
In 2021, former President Joe Biden signed into legislation the American Rescue Plan Act, which included enhanced ACA subsidies that made plans accessible at low or no value to sure low-income people and expanded eligibility for subsidies to some middle-income individuals. These credit have been prolonged by way of 2025 as a part of the Inflation Discount Act, signed in 2022.
Information tales present how easy it may very well be for insurance coverage brokers in sure states to signal individuals up for zero-cost ACA insurance coverage, unbeknownst to the shoppers. The Division of Well being and Human Companies has tried to crack down on these fraudulent practices.
However well being coverage specialists and analysts have cautioned in opposition to studying too deeply into the numbers of zero-claim enrollees.
“It’s not that he’s mistaken, however I believe he’s overinterpreting,” mentioned Michael Cannon, director of well being coverage research on the libertarian Cato Institute, of Blase’s evaluation.
Cox mentioned there’s proof that plan-switching has elevated, due partially to prolonged open enrollment intervals. Elevated plan-switching might make the variety of individuals being double-counted increased within the federal knowledge and improve the proportion of zero-claim enrollees over time. Some enrollees additionally might have been on an ACA plan for less than a part of the 12 months, which might make them much less prone to make a declare.
“We’re not attempting to argue there isn’t a fraud. It’s an actual factor. However the query is, how massive of a scale is that this drawback?” Cox mentioned. “Simply suggesting that anybody who’s not utilizing well being care is a fraudulent enrollee — that’s not true. Loads of individuals don’t use well being care.”
It’s not unusual for wholesome individuals in an insurance coverage market to not use their insurance coverage in a given 12 months, based on well being coverage specialists. And with the improved ACA subsidies, extra individuals signed up for market protection. Enrollment knowledge reveals that it made the market inhabitants youthful, and youthful enrollees could also be much less seemingly to make use of their insurance coverage. A latest report discovered that every 12 months from 2018 to 2022, a mean of 23% of enrollees in employer-sponsored plans didn’t use their medical insurance.
“In some way the concept that individuals not utilizing medical insurance is a few form of an issue — it may be. However in precept it isn’t,” mentioned Joseph Antos, a well being coverage skilled and senior fellow emeritus on the right-leaning American Enterprise Institute. “The purpose is that for insurance coverage to work, you want some people who find themselves not making claims on the insurance coverage.”
The principle commerce associations for insurers and hospitals, AHIP and the American Hospital Affiliation, have additionally disputed Paragon’s characterization of the federal knowledge and even printed weblog posts breaking down their arguments. AHIP pushed again on the concept that the insurance coverage trade is making the most of the improved subsidies by stating that current legislation caps well being plan earnings.
Paragon was began by Blase in 2021 and has change into broadly influential in Republican well being coverage circles. Alumni of the group are staffers within the Trump administration and in Home Speaker Mike Johnson’s workplace, so it follows that the group’s takeaways would change into Republican speaking factors.
It’s additionally not new for the GOP to say that authorities packages are filled with fraud. Through the negotiations over the One Huge Lovely Invoice, Republican lawmakers insisted Medicaid wouldn’t be reduce to pay for the tax cuts, however that “waste, fraud, and abuse” within the well being program can 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 12 months. 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 improve insurance coverage premiums.
“It’s change into a boondoggle. It’s a subsidy for insurance coverage corporations,” Speaker Johnson mentioned of the ACA subsidies at a shutdown press convention final week. “Once you subsidize the well being care system, and also you pay insurance coverage corporations extra, the costs improve. That’s been the issue.”
KFF Well being Information senior correspondent Julie Appleby contributed to this report.
KFF Well being Information is a nationwide newsroom that produces in-depth journalism about well being points and is among the core working packages at KFF—an impartial supply of well being coverage analysis, polling, and journalism. Be taught extra about KFF.
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