GAO Probe Finds ACA at High Risk for Fraud: 96% of Fake Applications Approved

This morning, the Government Accountability Office (GAO) released a damning report showing that the Affordable Care Act’s exchanges are highly vulnerable to fraud. The report was requested by Energy and Commerce Committee Chairman Brett Guthrie, Judiciary Committee Chairman Jim Jordan, and Ways and Means Committee Chairman Jason Smith.

As a result of expanded subsidies and porous federal oversight, the federal exchange approved subsidized health insurance for 23 of 24 fictitious applications submitted by GAO. In addition, GAO found that tens of billions of dollars in advanced subsidies to health insurers have not been properly reconciled. Together, these failures show that the ACA exchanges lack even minimal oversight and are rife with fraud and abuse that is hemorrhaging taxpayer dollars.

GAO’s findings are strong confirmation of Paragon research into improper and phantom enrollment. We identified an estimated 6.4 million improper enrollees in fully subsidized plans in 2025. The massive surge, driven by people unaware of their enrollment or with other coverage, has caused a doubling in the percentage of exchange enrollees without any medical claims from 2021 to 2024.

GAO Easily Enrolled Fictitious People in ACA Coverage With Subsidies

GAO conducted undercover testing for both the 2024 and 2025 plan years. In total, the agency created 20 fictitious identities and submitted 24 applications across the 2024 and 2025 plan years. The exchanges enrolled 23 of 24 applications.

2024 Applications: 100 Percent Approval

For plan year 2024, GAO submitted four fictitious applications—some directly through HealthCare.gov and others through brokers. All used invalid information, such as fake Social Security numbers, unverifiable identities, and income claims that would normally require documentation.

The exchange frequently did not request documentation even when documentation was necessary to support enrollment with a subsidy. The exchange approved coverage even when documentation was not submitted, not credible, or internally inconsistent. Two enrollees with invalid Social Security numbers were both enrolled. GAO noted one example where the marketplace “did not request documentation to corroborate the applicant’s citizenship status or estimated income,” even though the information should have triggered verification.

From GAO: “In one case, we received a notice from the federal Marketplace that it confirmed the applicant’s estimated income based on documentation we submitted. However, we did not submit documentation to confirm the applicant’s income. Such weaknesses in appropriately generating and resolving data matching inconsistencies may allow ineligible applicants to receive subsidized insurance coverage.”

2025 Applications: 19 of 20 Approved; 18 Still Active

For plan year 2025, GAO expanded its sample to 20 fictitious applicants. The result was even more alarming. Nineteen of 20 fictitious applicants received subsidized coverage, and coverage for 18 fictitious enrollees remained active as of September 2025.

This means that 18 fake people were still enrolled, with insurers receiving subsidies for those fake enrollees. The result mirrors nearly identical GAO work from 2014 to 2016, where every fictitious applicant was also approved. GAO explicitly notes that the 2024 to 2025 results are “generally consistent with results of similar testing” conducted nearly a decade earlier.

Massive Failure to Reconcile Subsidies Through IRS Processes

Under the ACA, individuals who receive advanced premium tax credits (APTC) must file a federal tax return and reconcile their subsidy (which is based on estimated income) with their actual income. This reconciliation is central to ensuring the subsidy amount is accurate.

GAO’s analysis shows large-scale non-reconciliation, and CMS paused enforcement actions based on IRS reconciliation data from 2021 through 2024.

GAO reports: “Based on our preliminary analysis, we could not identify evidence of reconciliation in IRS tax data, as of April 2025, for over $21 billion in APTC for enrollees that provided an SSN through the federal Marketplace in plan year 2023” for enrollees with Social Security numbers in the 2023 plan year.

That means nearly one-third of APTC paid to individuals with Social Security numbers was not matched with a tax return showing reconciliation in states using the federal exchange. In practical terms, CMS has no confirmation that tens of billions of dollars in payments were correct.

More from GAO: “Our preliminary analyses of federal Marketplace enrollment data identified issues with potential misuse of SSNs, including multiple uses of SSNs and those that match death data.”

The oversight failure is compounded by CMS’s decision to pause enforcement of reconciliation for multiple years. GAO writes that CMS “did not act on IRS data for consumers who did not file tax returns and reconcile prior APTC for plan years 2021 through 2024.”

This means that for at least four consecutive coverage years, individuals who received subsidies but never filed taxes were allowed to continue receiving subsidies without personal consequences. The statutory safeguard intended to prevent improper payments was abandoned during the entire Biden administration.

Additional Exchange Program Integrity Risks

GAO identifies more red flags:

• Social Security number (SSN) anomalies: More than 66,000 SSNs showed records indicating more than 366 days of coverage in 2024. According to GAO: “This overuse can occur because of identity theft and synthetic identity fraud, as well as data entry errors. Given complexities around identifying the true SSN-holder, we are further examining these cases and other instances of apparently overlapping coverage as part of our ongoing work.”
• According to GAO: “the most frequently used SSN in plan year 2023 was used to receive subsidized insurance coverage for over 26,000 days (over 71 years of coverage) across over 125 insurance policies.”
• Subsidies for the deceased: More than 58,000 SSNs receiving subsidies matched Social Security death records in 2023, including over $94 million in APTC tied to households with deceased members.
• According to GAO: “First, we identified over 7,000 SSNs where the reported date of death occurred prior to enrollment in the Marketplace for plan year 2023. In these cases, Marketplace data matched SSA death data on (1) SSN and (2) first name, last name, or birth month and year. Second, we identified over 19,000 SSNs that matched death data only on SSN. In these cases, matches had different names and dates of birth across Marketplace enrollment data and SSA’s death data. These matches could represent synthetic identity fraud.”

Bottom Line

GAO’s work shows that the exchanges are still approving fake people, permitting unscrupulous agents and brokers to maximize commissions and insurers to maximize enrollees by enrolling fake people, still paying subsidies to insurers for enrollees who never file taxes, and are still failing to prevent or correct massive improper payments. In sum, after more than 10 years of ACA implementation—and billions spent on verification systems—the exchanges remain extremely vulnerable to ineligible enrollment, fraud, and abuse. These problems exploded with the COVID-era subsidy boosts and would continue to flourish if the COVID-era subsidy boosts are extended.