The Persistent Obamacare Enrollment Fraud

It’s been a very busy week. Today’s newsletter leads with our new study examining improper enrollment in the Affordable Care Act (ACA) exchanges. The new study has already been covered by The Washington Post and discussed by The Wall Street Journal editorial page. The newsletter also debunks a misleading Medicaid enrollment study from Georgetown’s Center for Children and Families; highlights the administration’s new rule on Medicaid work requirements for able-bodied, working-age adults; and summarizes a new piece on why health care affordability starts with addressing high hospital prices and costs.

An Estimated 6.2 Million Improper Exchange Enrollees in 2026

Our new study, The Persistent Obamacare Enrollment Fraud, follows our 2024 and 2025 reports on improper enrollment in the ACA exchanges, with key updates and learnings. Exchange enrollment is expected to decline over the next two years. Our analysis suggests that a significant share of the coming decline will reflect the removal of duplicate, improper, and phantom enrollment rather than the loss of legitimate coverage.

Our data analysis is straightforward. We compare CMS enrollment data with Census Bureau population estimates and analyze enrollment patterns, plan selections, and demographics to identify improper enrollment and important trends.

We estimate that approximately 6.2 million sign-ups in 2026 were improper, representing 27 percent of all 2026 open enrollment sign-ups. These improper enrollments could lead to as much as $25 billion in improper subsidy expenditures in 2026, nearly one-quarter of projected federal exchange subsidy spending.

What We Found

• Improper enrollment remains overwhelmingly concentrated in HealthCare.gov states. Fifty-six percent of 2026 HealthCare.gov sign-ups claimed incomes between 100 and 150 percent of the federal poverty level—the category that qualifies for the largest subsidies.
• Plan selection patterns increasingly suggest unauthorized and phantom enrollment activity. Millions of low-income enrollees selected bronze plans with deductibles exceeding $7,000 despite silver plans offering dramatically better coverage for little or no additional premium—a pattern strongly indicative of unauthorized enrollments or intermediary-driven enrollment meant to maintain commissions through enrollment in a zero-premium plan rather than the plan with the best value. Table 4 shows that silver-plan selection among low-income households collapsed in HealthCare.gov states and states with a legacy of HealthCare.gov, while remaining largely unchanged in state-based exchanges.

• Enrollment records are increasingly incomplete. Nearly 60 percent of HealthCare.gov enrollees reported unknown race or ethnicity, a pattern consistent with unauthorized or incomplete enrollments. Figure 3 below shows the surge of enrollees with unknown race/ethnicity in HealthCare.gov states relative to state-based exchanges from 2022 to 2024—when fraudulent enrollment schemes exploded.

Many improper enrollees are likely phantom enrollees—people who are unaware of their enrollment, covered elsewhere, or entirely fictional. In 2024, 35 percent of exchange enrollees and 40 percent of fully-subsidized low-income enrollees generated no medical claims—double the percentage expected in a normal health insurance market. The Centers for Medicare & Medicaid Services (CMS) found that an average of 1.6 million people per month were simultaneously enrolled in Medicaid and subsidized exchange coverage.

Even after the expiration of the enhanced COVID-era subsidy boosts, exchange coverage remains heavily subsidized, with taxpayers continuing to cover at least three-quarters of the premium costs for the vast majority of enrollees—with nearly three-in-ten enrollees in fully-subsidized plans this year.

Why This Matters

Enhanced subsidies, widespread zero-premium plans, weakened verification requirements, passive automatic reenrollment, and enrollment pathways that made unauthorized enrollment easier all contributed to the deterioration in exchange integrity. The Trump administration and this Congress were confronted with a massive cleanup effort.

Fortunately, the Trump administration has already removed nearly two million improper enrollees through actions targeting duplicate Medicaid-exchange enrollment and individuals who failed to comply with tax-filing requirements. Additional integrity reforms enacted administratively and legislatively should further reduce improper enrollment over the next two years.

The ACA exchanges can only function effectively if taxpayer-funded subsidies are directed to eligible individuals and if enrollment systems are not vulnerable to fraud and abuse. The goal of health policy should not be to maximize enrollment regardless of eligibility or cost. The goal should be to ensure that public resources are directed to the people they are intended to serve.

The paper also includes a detailed set of recommendations to strengthen eligibility verification, improve identity authentication, tighten automatic reenrollment, investigate enrollment intermediaries involved in unauthorized enrollments, and reduce subsidy distortions that encourage fraud.

You can read the full paper here: The Persistent Obamacare Enrollment Fraud, which I authored with Gabrielle Minarik, Niklas Kleinworth, Mark Howell, and Liam Sigaud.

Joan Alker’s Narrative Doesn’t Fit the Evidence

Joan Alker, the executive director of Georgetown’s Center for Children and Families, suggests that recent declines in child Medicaid enrollment are evidence that eligible children are losing coverage as a result of “chilling effects” from the One Big Beautiful Bill. As we discuss in a new Prognosis, her claims are speculative and ignore key facts about recent Medicaid and Children’s Health Insurance Program (CHIP) trends.

• Child Medicaid and CHIP enrollment remains extraordinarily high by historical standards. Approximately 42.2 million children were enrolled in Medicaid and CHIP in February 2026, essentially unchanged from February 2020. Because the child population declined during this period, a higher percentage of American children are enrolled in Medicaid and CHIP today than before the pandemic.
• The decline in child enrollment should be viewed in the context of the COVID continuous coverage requirement, which prevented states from removing ineligible beneficiaries for more than three years. Medicaid enrollment became highly inflated during this period, and overall Medicaid enrollment remains well above pre-pandemic levels.
• The One Big Beautiful Bill’s eligibility reforms almost entirely apply to able-bodied, working-age adults in the ACA Medicaid expansion population.
• A basic empirical investigation shows that Alker’s “chilling effect” theory is dubious. According to Alker, “parents of citizen children living in mixed status families are too fearful of deportation and other negative consequences if they share contact information.” If that explanation were accurate, one would expect states with the largest undocumented populations to report the steepest declines in child Medicaid enrollment. But that’s not what the data show. The correlation between those variables is essentially zero.

Medicaid Work Requirements: A Reform That Promotes Work and Reduces Poverty

On Monday, CMS released its interim final rule implementing Medicaid work requirements. The rule implements a key reform contained in the One Big Beautiful Bill and represents an important step toward restoring Medicaid’s focus on the truly vulnerable while encouraging greater labor-force participation among able-bodied, working-age adults. More than 80 percent of Americans support requiring able-bodied, working-age adults to work in order to receive benefits from the Medicaid welfare program.

One of the most overlooked aspects of this debate is the reform’s effect on poverty and economic mobility. On Monday, the Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services released a report estimating that the Medicaid work requirements would increase employment and earnings sufficiently to lift between 1.6 million and 2.9 million people out of poverty.

Much of the discussion surrounding work requirements focuses on coverage effects while ignoring the benefits of increased employment, earnings, and self-sufficiency. Evidence suggests that well-designed work requirements can promote economic independence.

Here is our statement on the rule. The administration struck the right balance between accountability and appropriate accommodations, but effective implementation and verification will ultimately determine whether the reform achieves its objectives.

Hospitals Are Driving the Health Care Cost Crisis

Several outlets have published an op-ed from John R. Graham and me on the main drivers of rising health care costs: inefficient hospitals. The op-ed draws on findings from our recent report, The Hospital Cost Crisis, which documents the extent of excessive hospital pricing, the government policies that have led to high and rising hospital prices, and policy reforms to improve competition and affordability. Key points from the op-ed:

• Hospital prices have risen roughly three times faster than inflation since 2000 and more than twice as fast as wages.
• Government policies—including Certificate of Need laws, site-of-service payment disparities, and the 340B program—have reduced competition and encouraged consolidation.
• More than half of physicians are now employed by hospitals, contributing to higher prices and fewer choices for patients.
• Medicaid-financing arrangements and other subsidies increasingly benefit large hospital systems, permitting hospitals to remain deeply inefficient while shifting large costs to taxpayers and privately insured families.
• Health care affordability will remain elusive until policymakers reduce government-created advantages for large hospital systems and promote genuine competition.