Healthcare.gov fraud fuels GOP attempt to cut Affordable Care Act

Millions are fraudulently receiving health insurance subsidized by the federal government, according to a new conservative think tank report to be released Tuesday, as Republicans move to tighten controls on Healthcare.gov and limit enrollment.

The Biden administration’s attempts to make it easier for people to sign up for insurance through the federal marketplace website also allowed insurance brokers to commit fraud, experts across the political spectrum agree. Those brokers were able to enroll people, sometimes without their knowledge, for subsidized plans by misstating their incomes, while earning commissions from insurers.

The problem accelerated this year, says a new report by Paragon Health Institute, headed by a former White House aide during President Donald Trump’s first term who is influential in shaping GOP health policy. The report comes as the Trump administration prepares stricter enrollment rules for the federal health insurance website and congressional Republicans seek even more restrictions as part of sweeping legislation to enact Trump’s agenda.

Created under the 2010 Affordable Care Act, the federal Healthcare.gov and state-run online insurance marketplaces allow people to shop for federally-subsidized private insurance plans. Brokers and agents play a significant role in signing up people who are eligible.

The report estimates that the income of more than a quarter of the 24 million marketplace enrollees this year was misrepresented, often by brokers, so that the plan would be fully subsidized. The analysis suggests that the vast majority of those fraudulent enrollments were on Healthcare.gov — which is used by 31 states — and among people claiming to earn between 100 and 150 percent of the federal poverty level, the threshold to qualify for a no-cost health plan.

“All of the incentives for enrollees, brokers and insurers lead to this outcome where there’s a misestimation of income to qualify for large subsidies,” said Brian Blase, president of Paragon Health Institute.

But the report’s estimate of 6.4 million fraudulent enrollments seems inflated, according to current and former federal health officials.

Jeff Grant, who oversaw Healthcare.gov at the Centers for Medicare and Medicaid Services from 2017 until his resignation in February — said he would put the number closer to “a million, or a million and a half.”

A CMS spokesperson didn’t provide an estimate when asked how many enrollments are fraudulent. Two CMS employees, who spoke on the condition of anonymity because they were not authorized to speak publicly, said fraud on Healthcare.gov is a big problem, but that more than several million fraudulent enrollees seem too high.

Blase and his three co-authors reached their conclusions by comparing the number of marketplace enrollees by state who claimed their income is low enough to qualify for a no-cost plan, with Census estimates for how many people in the state fall in that income group. The number of actual enrollees exceeds the number of potential enrollees in 29 states, his report found.

His report is likely to fuel ongoing complaints by Republicans that government insurance programs are beset with waste, fraud and abuse. Lawmakers have spread that message widely as they seek to extract deep savings from Medicaid and the insurance marketplaces to pay for Trump’s sweeping tax cuts and spending increases in what he dubbed the “one big beautiful bill.”

People earning between 100 and 150 percent of the federal poverty level can sign up anytime during the year. Grant, the former CMS official, said all they needed to provide was a name and a birth date, creating an environment ripe for fraud.

Blase argues the best way to reduce improper enrollments is to let the extra subsidies added during the pandemic expire at the end of this year and limit most enrollments to a six-week period.

Democrats, including Sen. Ron Wyden (Ore.), the ranking member of the Senate Finance Committee, have urged the CMS to take stronger actions against brokers rather than make it harder for people to enroll in coverage.

The agency has ramped up enforcement in the past year after reports that some brokers used misleading advertising to obtain people’s names and birth dates and enroll them without consent. Sometimes they moved customers from one plan to another, according to a class-action lawsuit filed in April 2024.

Last year, following 183,553 complaints of broker fraud, the CMS suspended 850 agents and brokers from participating in marketplace enrollment. A spokesperson for the CMS said the agency has resolved all but 458 of the complaints.

The CMS is also expected to finalize stricter income and eligibility verification rules for Healthcare.gov as soon as this week.

“We are cracking down on fraud in the health insurance marketplace, plain and simple,” CMS Administrator Mehmet Oz said in a statement to The Post. “CMS is actively working to stop bad actors from exploiting the system and hijacking coverage decisions from American families.”

Republicans in Congress aim to go even further.

The House-passed bill tightens verification rules and shortens enrollment periods. Language from a key Senate committee released Monday also includes tighter verification rules. Some of those provisions are a return to pre-pandemic Healthcare.gov rules, before the Biden administration relaxed verification to expand coverage.

It also blocks people from receiving subsidies until their eligibility is fully verified and eliminates automatic reenrollments — restrictions that state marketplace directors call unnecessary if the goal is ending broker fraud on Healthcare.gov.

Jessica Altman, executive director of the state-run marketplace Covered California, said roughly half of enrollees in her state’s marketplace used an agent or broker. But she said Covered California doesn’t have a problem with fraud because the state requires extra steps, including verifying enrollees’ social security numbers.

“What does Healthcare.gov need to do?” Altman said. “The same operational things we have always done.”

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