The Rise of Phantom Obamacare Enrollees: Biden COVID Credits Drive Massive Increase in Individual Market Enrollees With No Medical Claims

Key Takeways:

• The number of ACA individual market enrollees with no medical claims more than tripled from 2021 to 2024. Nearly 12 million enrollees had no medical claims during 2024—equal to 8 million enrollees on an annualized basis.
• A staggering 40 percent of enrollees in 94 percent actuarial value silver plans and bronze plans had no medical claims in 2024.
• The rise in phantom enrollees is absent in the small-group market, strongly suggesting it was driven by Biden’s COVID credits.
• Tens of billions in federal subsidies are flowing to insurers and brokers for phantom enrollees—people without a single doctor visit, prescription filled, or service received.
• This surge mirrors Paragon’s findings on improper enrollment, showing taxpayer dollars wasted on coverage for people not using the program.

On August 11, the Centers for Medicare and Medicaid Services released new data that shows a concerning spike: the number of individual market enrollees with no medical claims more than tripled from 2021 to 2024—a consequence of Biden-era policies that fueled a surge of phantom enrollees. The percentage of individual market enrollees with no claims jumped from fewer than 20 percent in 2021 to 35 percent in 2024—an increase of nearly 80 percent in three years. This explosive growth in phantom enrollees matches patterns Paragon has documented for more than a year.

A pandemic-era expansion of Affordable Care Act (ACA) subsidies led to a staggering increase in the number of individual market enrollees with no claims—from 3.5 million in 2021 to 11.7 million in 2024. In 2024, more than one-third of enrollees—and two-in-five with fully subsidized plans—generated no claims, meaning every taxpayer dollar went to insurers and middlemen without funding a single medical service. The likely issue: millions of enrollees had other forms of coverage or were enrolled without their knowledge. More generous subsidies should lead to more people using needed care, not tens of billions of annual subsidies spent on coverage delivering nothing—no doctor visits, no prescriptions, and no medical services.

Figure 1 shows the percentage of individual market and small group market enrollees with no claims from 2019 through 2024. From 2019 to 2021, the percentages in each market were nearly the same, so the small group market serves as a reasonable control to assess the impact of significant policy changes that affected the individual market. The small group market—unaffected by Biden subsidy expansions—held steady at about one in five zero-claim enrollees, underscoring that the spike in the individual market was policy-driven, not a natural trend. From 2021 to 2024, the percentage of enrollees without claims in the individual market increased by 16.0 percentage points—12.1 percentage points above the 3.9 percentage point increase in the proportion of small group market enrollees without any claims.

In 2021, President Biden signed legislation significantly expanding subsidies to insurers for individual market plans in 2021 and 2022. In 2022, Biden signed legislation that extended these Biden COVID credits through 2025. The COVID credits were the primary factor in a surge of improper enrollment in the exchanges, which Paragon estimates reached 5.0 million people in 2024 and 6.4 million people in 2025. They also appear to have caused a significant increase in enrollees who do not use any medical services through their plan.

CMS reports that the total number of individual market enrollees without claims in 2024 was 11.7 million. CMS’s count includes anyone enrolled at any point in the year, making it higher than annualized enrollment reports. On an annualized basis, there were only about two-thirds as many individual market enrollees as reported by CMS’s data. Adjusted to an annual basis, 7.8 million individual market enrollees used no medical services in 2024—an increase of nearly 5.5 million enrollees using no medical services from 2021. In 2024 alone, taxpayers spent billions subsidizing coverage for 7.8 million full-year enrollees who never used their insurance. Every dollar went to insurers and middlemen, with zero benefit to patients.

As Paragon discussed in our The Great Obamacare Enrollment Fraud series, large-scale fraud schemes have led to people enrolling in exchange plans without their knowledge, and others being misled by false offers of cash or gift cards to apply for insurance. A few months ago, a Bloomberg exposé revealed fraud rings in Florida, including brokers earning thousands daily by enrolling people who often had no idea.

The main subject of Paragon’s research was the category of enrollees claiming income between 100 and 150 percent of the federal poverty level (FPL). Biden’s COVID credits fully subsidized premiums for 94 percent AV plans for people in that income category. As a result of the COVID credits, enrollees, brokers, and insurers all had strong incentives to cheat—or significantly benefited from others doing so. It is therefore unsurprising that rampant fraud and improper enrollment followed.

Figure 2 shows the total number of individual market enrollees without claims from 2019 to 2024. The total number was fairly flat from 2019 to 2021, going from 3.2 million to 3.4 million in 2020 to 3.5 million in 2021—before rapid growth in 2022. In 2022, the number was 5.1 million; up to 8.8 million in 2023; and up to 11.7 million in 2024. Figure 2 demonstrates that the growth of enrollees without claims was driven by 94 percent actuarial value (AV) silver plans and bronze plans.

Only enrollees claiming income between 100 and 150 percent of FPL can get 94 percent AV plans, which contain sharply reduced deductibles, copayments, and out-of-pocket limits. In Paragon’s Great Obamacare Enrollment Fraud calculations, we compare enrollees claiming between 100 and 150 percent FPL to the eligible population in that range, with the excess indicating likely fraudulent enrollment. As improper enrollment soared, it is not surprising that enrollment of people without claims has soared.

Total enrollment in the 94 percent AV silver plans soared from 3.4 million in 2020 (and 5.0 million in 2021) to 11.6 million in 2024. Consistent with both fraud and the enrollment of a large number of people without awareness of their enrollment, the share of 94 percent AV plan enrollees with no claims doubled from 20 percent in 2021 to 40 percent in 2024—about 3.1 million people in 2024 on an annual basis.

Bronze plans, often free to those above 150 percent of FPL, accounted for another third of the zero-claims growth—likely a way for unscrupulous brokers to enroll people without triggering premium payments that would alert them. Brokers can collect commissions regardless of whether that enrollee ever uses the plan—creating a perverse incentive to pad rolls with people who don’t need or even want coverage.

Figure 3 shows the percentage of zero-claim enrollees for the four main plans (bronze, 94 percent AV silver, exchange non-94 percent AV silver, and gold) from 2019 to 2024. Figure 2 shows the most significant increase was among enrollees with the 94 percent AV silver plans, but there were also significant increases in the percentage of zero-claim enrollees with bronze plans and gold plans. Due to the incentives created by the method used to calculate premium subsidies, many gold plan enrollees can also receive fully subsidized plans. As Figure 2 shows, the total number of zero-claim gold plan enrollees remains well below zero-claim bronze or 94 percent AV plan enrollees.

Table 1 contrasts the total number of enrollees without claims and the percentage of enrollees with that coverage without claims from 2021 to 2024—and corresponds to Figure 2. The total number of enrollees without claims rose from 3.5 million to 11.7 million. Of the growth in the total number of enrollees without claims, 44.3 percent was from the 94 percent AV plans and 33.0 percent was from the bronze plans.

In Paragon’s previous work, we uncovered that improper enrollment in exchange plans was concentrated in states using the federal exchange, or HealthCare.gov. In 12 states, over 40 percent of 94 percent AV silver enrollees had no claims in 2024: Louisiana (49.4 percent), Ohio (46.5 percent), Texas (45.9 percent), South Carolina (45.6 percent), Arizona (45.0 percent), Oklahoma (44.1 percent), Tennessee (43.5 percent), North Carolina (42.3 percent), Massachusetts (41.1 percent), Georgia (40.9 percent), Illinois (40.5 percent), and Missouri (40.4 percent). All of these states, except Massachusetts, use HealthCare.gov. Florida tops the list with 1.2 million zero-claim 94 percent AV plan enrollees, though its share was slightly lower at 37.7 percent.

Biden’s COVID credits turned the exchanges into a major profit engine for insurers and intermediaries, with CMS’s own data showing that coverage does not translate into care. The One Big Beautiful Bill included important program-integrity reforms that will reduce wasteful and fraudulent exchange spending. Congress must recognize that nearly 8 million full-year individual market enrollees in 2024 consumed no health care at all, even as tens of billions of subsidies flowed to major insurance companies on their behalf. Congress should let the Biden COVID credits expire and pursue ACA reforms that direct dollars to patient care, not middlemen.