Myth: The OBBB will result in large coverage losses

Debunking the Myths of the One Big Beautiful Bill

Myth: The OBBB will result in large coverage losses

Key Facts

• There are roughly 12 million ineligible enrollees in Medicaid expansion and the Obamacare exchanges—the result of the Biden administration’s enrollment-at-any-cost strategy. Eligibility review requirements in the OBBB will help ensure that only those legally eligible for coverage will receive it.
• One-quarter of the estimated number of ineligible recipients comes from Democrats’ intentional sunset of Biden’s COVID credits—the enhanced Affordable Care Act (ACA) subsidies in their 2022 reconciliation bill, which is unrelated to the OBBB.
• Nearly one-third of the estimated number comes from the Congressional Budget Office’s estimate of people who will not meet the OBBB’s work and community-engagement requirement. More than 80% of the American people support requirements for able-bodied, working-age adults to work to receive a welfare benefit. These requirements can be met by 80 hours of work, job training, education, or volunteer service each month.
• The claims about lost coverage depend on the CBO, which has an extremely poor track record when estimating the impact of legislation on health coverage. For example, CBO was off by a factor of more than 10 with its estimate of coverage losses associated with eliminating the ACA’s individual mandate penalty.

Background

The Biden administration pursued an enrollment-at-any-cost strategy that led to massive numbers of ineligible people being enrolled, many of whom use no health care services and are unaware of their enrollment. The Biden administration permitted unchecked fraud rings to grow that misled applicants and enrolled them without their knowledge. In 2025, 45 percent of all exchange enrollees took no action and were automatically re-enrolled in fully or near-fully subsidized plans. More than 6.4 million people are enrolled in fully subsidized exchange plans who are not eligible. States also have massive incentives to improperly enroll people in the ACA’s Medicaid expansion because they get seven times more federal funding for every $1 of spending on expansion enrollees than on traditional enrollees. Medicaid’s improper payment rate exceeds 25 percent, largely because states abandoned proper eligibility rules. We estimate that there are at least 6 million ineligible Medicaid expansion enrollees in 2025.

The OBBB ultimately will help the poor and vulnerable by focusing Medicaid and the ACA on them and their needs, instead of driving hundreds of billions of taxpayer dollars into the pockets of insurers, big hospitals, and fraudsters. Verifying eligibility and reducing fraud doesn’t mean that those who lose coverage have no options. Millions will have access to subsidized exchange plans or employer coverage. And able-bodied, working-age adults should have to work or show meaningfully productive activity to be eligible for a government welfare program. Not only is it the right principle, but this policy benefits these adults by encouraging them to work, build skills, and engage with their community.