A shocking new report by the Government Accountability Office (GAO) reveals widespread fraud in the Obamacare insurance marketplace, leaving U.S. taxpayers on the hook for billions of dollars in wasted spending. An investigation by the non-partisan watchdog highlights extensive structural flaws with the Advance Premium Tax Credit (APTC) that allow fake identities, misused Social Security numbers (SSNs), and even dead people to receive Obamacare subsidies.
This report should slam the door on any and all congressional efforts to extend the Biden-era enhanced premium tax credits that were implemented on a temporary basis during the pandemic and are scheduled to expire at the end of the calendar year. This program clearly needs extensive reforms to ensure taxpayer dollars are not being squandered.
Enacted by the Affordable Care Act in 2010, the APTC is the mechanism through which the federal government subsidizes health insurance premiums for individuals purchasing coverage on the Obamacare marketplace. This federal subsidy is sent directly to insurance companies on behalf of eligible enrollees, lowering the monthly premiums they would otherwise pay themselves. The amount of the APTC is based on an individual’s estimated income for the upcoming year, and the amount is later reconciled when they file their taxes to reflect what they actually earned.
It’s not difficult to see how relying on self-reported income estimates creates ripe opportunities for fraud. Along with automatic re-enrollment and limited documentation requirements, this framework exhibits glaring weaknesses bad actors can exploit to game the system. Unscrupulous brokers can earn extra commissions from insurance companies by having enrollees misstate their income. In turn, insurers have little incentive to prevent fraudulent sign-ups by brokers since they receive federal subsidies for all enrollees, whether or not the individual is actually eligible.
To understand just how easy it is to exploit these structural weaknesses, GAO organized a covert program that involved creating fake identities to test how easily they could navigate the marketplace and obtain taxpayer subsidized coverage. The results were striking. In late 2024, 100% of fictitious applicants were approved for subsidized coverage, and 90% continued to receive coverage in 2025. The Centers for Medicare & Medicaid Services (CMS) approved coverage in cases where documentation was falsified or even missing. These fake enrollees received monthly subsidies totaling over $12,000 in GAO’s sample alone.
The widespread misuse of SSNs enables fraud in the Obamacare marketplace on a massive scale. In 2023, a single SSN was used on applications for over 125 insurance policies totaling over 26,000 days of coverage, the equivalent of 71 years. The GAO study also found that 58,000 SSNs receiving the APTC matched Social Security death data. At least 7,000 enrollees had died before coverage started, meaning their applications relied on SSNs of deceased individuals. As a result, $94 million in taxpayer-funded subsidies were sent to insurance companies on behalf of deceased individuals.
Fraud in the Obamacare marketplace extends beyond fictitious enrollees. The pursuit of commissions and federal subsidies has created perverse incentives for insurance agents and brokers, resulting in an explosion of unauthorized plan changes that hurt patients and waste taxpayer dollars. The GAO study identified 160,000 likely unauthorized plan changes by brokers in 2024 alone. Furthermore, CMS itself received approximately 275,000 complaints in just eight months in 2024 from Americans whose plans were changed without their consent.
What makes this situation so troubling is that longstanding concerns about fraud went unheeded by lawmakers for years. As early as 2015, GAO was already sounding the alarm about Obamacare marketplaces approving coverage for fictitious applicants. The following year, GAO reported that CMS lacked even basic safeguards to prevent duplicate or overlapping subsidies. Ignoring these repeated warnings by watchdogs practically guaranteed that the Biden-era enhanced subsidies would devolve into a fraud-ridden disaster.
The implications for taxpayers are bleak. In addition to inflating the federal deficit, fraud on this scale pushes insurance premiums higher for all legitimate enrollees, which, in turn, only erodes the public’s confidence in federal health programs. This untenable situation demands immediate reform. Practical fixes could include penalizing brokers and insurers for improper subsidy determinations and ensuring subsidies are calculated from verified income, not self-reported projections.
Yet, perhaps the most effective action Congress can take in the immediate term to address this situation is no action at all: by doing nothing and simply letting the Biden-era enhanced premium tax credits expire at the end of 2025 as currently scheduled, lawmakers would remove gargantuan financial incentives for bad actors to cheat the system. This would ensure that taxpayer dollars actually reach care for those who need it, rather than fraudsters looking for an easy payday.