Opinions from health policy experts

As lawmakers continue to debate the Affordable Care Act’s enhanced premium subsidies, Republicans are citing reports of fraud in the health insurance market as a reason why the tax cuts should not be extended.

Republican lawmakers cited a Dec. 3 report from the U.S. Government Accountability Office, a bipartisan congressional watchdog, on fraud related to ACA subsidies.

Democrats’ proposal to extend the ACA enhanced credit facility is “rife with fraud and abuse — and I would say it is rife,” Senate Majority Leader John Thune, R.S., said Thursday on the Senate floor.

Some health policy experts argue that the scope of the fraud is not as serious as lawmakers suggest and that it is better to strengthen the ACA’s safeguards than cut enhanced subsidies altogether.

“The scope of the fraud is really trivial,” said Michael Gasmano, a health policy professor at Lehigh University. “It’s simply a scare tactic to justify reducing the federal government’s role in subsidizing health insurance,” he said.

He pointed to a study as an example. In 2023, more than 58,000 people with deceased Social Security numbers also received premium subsidies, according to the GAO. This represented just 0.4 percent of all Social Security numbers that received premium tax credits that year, GAO found.

Senate Democrats have proposed extending the enhanced ACA subsidies, which are set to expire at the end of the year, for an additional three years. These subsidies lower premiums for ACA members.

About 22 million people, or 92% of ACA enrollees, receive subsidies, according to KFF, a nonpartisan health policy research group. KFF estimates that without benefits, beneficiaries’ premiums would more than double on average by 2026.

Republicans proposed a plan to lapse the ACA subsidy expansion. Instead, it will make payments of up to $1,500 to consumers with health savings accounts.

Both bills failed in the Senate on Thursday.

House Speaker Mike Johnson (R-Louisiana) said Tuesday there will be no vote on extending enhanced ACA subsidies, making it almost certain they will expire as scheduled.

Republican lawmakers cited fraud as a key reason for not extending the aid.

“You can never have a competitive market if the market is full of fraud,” Sen. Bill Hagerty (R-Tenn.) said Thursday.

GAO’s report outlined various fraud channels involving ACA subsidies available through the federal marketplace, which is used by approximately 30 states. The rest operate their own marketplaces.

“When you look at the facts in this report, the depth of the negligence is undeniable,” said Rep. Jefferson Van Drew (RN.J.), chairman of the House Judiciary Oversight Subcommittee, during Wednesday’s hearing on ACA subsidy fraud.

The report comes as President Donald Trump and the Republican Party have recently slammed fraud in other welfare programs.

For example, President Trump recently called Minnesota, a state with a large Somali population, a “center of illicit money laundering activity” and said he does not want Somali immigrants in the United States. Many of the alleged perpetrators in a series of fraud scandals related to the state’s social safety net programs, estimated to potentially cost more than $1 billion, are Somali.

Republicans have also tried to dismantle the ACA since its inception. This year, the multibillion-dollar Republican tax cut package known as the “Big and Beautiful Bill” made several administrative adjustments to the ACA. As a result, more than 3 million people are expected to lose insurance over the next 10 years.

In 2017, a Republican bill to repeal and replace the ACA failed after a dramatic “no” vote by three Republican defectors, including the late Sen. John McCain of Arizona.

Through confidential testing, GAO submitted fictitious applications through the federal ACA marketplace in 2024 and 2025.

According to the report, the federal marketplace approved all four false claims submitted by GAO in 2024, resulting in a total of $2,350 in monthly premium subsidies paid directly to insurance companies.

In 2025, GAO submitted 20 additional fictitious applications. According to the report, 18 of them have been approved and are still active as of September 2025. In total, insurance premium subsidies paid to insurance companies amounted to more than $10,000 per month.

The findings suggest “weaknesses in enrollment management,” GAO wrote.

However, GAO said the results cannot be generalized to the world of ACA enrollees and are consistent with results from similar tests conducted from 2014 to 2016.

Subsidies have been available since 2014, during the early days of the Affordable Care Act (also known as Obamacare). This subsidy, known as the Premium Tax Credit, was enhanced in 2021, making it even more valuable and available to more households.

“My main takeaway from this report is that fraud is a consistent problem for the federal marketplace, not surprisingly for federal programs that involve large subsidies,” Kay Pestaina, director of KFF’s patient and consumer protection program, wrote in an email.

“While not small, GAO’s report does not show that this is an outlier when compared to fraud in other federal programs,” she wrote.

In 2023, more than 58,000 people with Social Security numbers who died also received premium deductions, according to the GAO.

Gusmano said it was unclear how many of those people were legally eligible for the subsidy but later died.

Additionally, there were instances in which Social Security numbers were used multiple times to apply for benefits. GAO found more than 29,000 Social Security numbers with 365 days or more of ACA subsidy coverage in 2023, and about 66,000 in 2024.

But the raw numbers are misleading, Lehigh University’s Gusmano said. He says this number masks a small proportion of all subsidy recipients.

For example, in addition to data on deaths that accounted for 0.4% of all Social Security numbers with premium deductions in 2023, the GAO study found that cases of multiple use of Social Security numbers reached 0.2% of all Social Security numbers in 2023 and about 0.4% in 2024.

“I don’t believe they uncovered any large-scale fraud or abuse,” Gusmano said. “If you ignore the denominator, some numbers can look scary right away.”

Even for those who believe the fraud is significant, Gusmano said a reasonable response would be to reform the system to reduce waste, rather than allowing enhanced subsidies to expire.

“If you apply the idea that any system will have zero problems to any program, public or private, you’re going to end up shutting down every program,” he said. “That’s a very problematic standard.”

Experts said the negative economic impact on households and the public health impact of not extending subsidies far outweighs the losses from fraud.

If the enhanced subsidies were removed, the average subsidy recipient would pay about $1,900 in out-of-pocket premiums in 2026, up from nearly $900 in 2025, according to KFF. Many households will lose aid altogether. About 4.8 million people are expected to lose their health insurance next year if the enhanced subsidies expire, according to the Urban Research Institute.

Nick Fabrizio, a health policy expert and associate professor at Cornell University’s Jeb E. Brooks School of Public Policy, said the U.S. should extend the subsidies until 2026.

But unlike Democratic proposals, he said the extension should be coupled with reforms to curb the scope of fraud in the federal marketplace and stem ballooning costs in the broader health care system.

“We are in a situation where we have to extend the subsidy,” he said. “We have no other choice. But we have to stabilize the system. … We have to meet somewhere in the middle.”

Fabrizio said large government programs always involve some degree of fraud and corruption.

GAO’s report notes that fraud risk is likely to increase as ACA subsidies increase, and that the Centers for Medicare and Medicaid Services has not updated its fraud risk assessment since 2018, before the ACA subsidy enhancements became available.

For example, CMS estimates that the total insurance premium tax credit will be about $124 billion in 2024, more than double the $53 billion in 2018, according to the report.

This increase may require further fraud regulations, the company said.

“Every insurance program I’ve ever studied has had fraud,” said Gerald Anderson, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health. “If you can make money doing some fraud, people will take advantage of it.”

Anderson said he believes the government needs to adjust some parameters of the ACA subsidy system.

For example, enhanced subsidies would allow certain low-income ACA members to purchase health insurance with $0 premiums. CMS has identified such zero premium plans as a potential conduit for fraud. Insurance brokers can enroll people in plans without their knowledge and collect commissions from insurance companies in the process.

Anderson said introducing even a small premium would reduce such fraud.

“I think the parameters of the system always need to be tweaked,” he said. “You can’t predict everything that’s going to happen, so it’s good to revise.”