Unmasking ACA Fraud: How Millions of Unused Health Insurance Policies Reveal Program Abuse

During the pandemic, the Biden administration introduced enhanced subsidies for ACA exchange plans. This meant many federal taxpayers ended up covering the entire premium costs for silver, bronze, and gold plans. Changes in income verification rules added to the problem, leading to an estimated 5 million people being improperly enrolled in 2024. The situation got worse in 2025, with over 6.4 million improper enrollees, costing taxpayers $27 billion.

Fraud often occurred when people misstated their income or when brokers provided incorrect information to secure larger subsidies. A lack of accountability allowed these enrollees to keep most of the overpaid subsidies, benefiting financially at taxpayers’ expense.

Interestingly, many enrollees were unaware they were part of these schemes. A Bloomberg report highlighted cases where individuals were signed up without their knowledge. This meant insurers benefited from subsidies while fraudsters collected big commissions. As a result, many found themselves in plans that didn’t meet their needs, often leading to tax penalties.

In July 2025, the One Big Beautiful Bill (OBBB) aimed to tackle these issues. It instituted reforms requiring anyone who misstated their income to repay improperly received subsidies. The bill also reinstated stricter eligibility checks and limited misuse of special enrollment periods.

The Trump administration had attempted to curb ACA fraud with proposed rules. These included a $5 premium for free plans and stricter verification processes. However, a federal district court stayed most of these rules, leaving the system vulnerable to fraud.

Despite recent reforms, Congress must ensure that Biden COVID credits—responsible for much of the fraud—expire at the end of the year. Allowing free or nearly free plans to continue creates opportunities for fraudsters to exploit the system, harming innocent citizens and costing taxpayers billions.

Even without fraud, zero-dollar premiums create social issues. Many enrollees may not value their coverage and have little motivation to report their enrollment, especially if they have other insurance. Brokers and insurers are often incentivized to maintain these enrollments to secure larger commissions and government funds.

Overall, while recent reforms have made strides, ongoing vigilance is necessary to protect both the system and taxpayers.



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