GAO says ACA fraud is rampant Image By HPN staff Key Points GAO’s covert testing shows that CMS approved coverage and paid substantial subsidies to fictitious applicants, repeating failures previously identified in 2014 and 2016. ACA subsidies increased from $18 billion in 2014 to an estimated $138 billion in 2025, with a permanent extension projected to cost up to $383 billion over 10 years. As Congress considers extending or restructuring ACA subsidies, evidence of improper payments, SSN misuse, and unauthorized enrollments is strengthening arguments for reform or alternative approaches such as HSA expansion. Congress is expected to tackle the extension of Affordable Care Act health insurance benefits this month. Those subsidies expired on Dec. 31. 2025. But as Congress debated whether to extend the ACA benefits, the Government Accountability Office (GAO) echoed reports from the private sector: the subsidy program may be rife with fraud and abuse. Federal lawmakers asked the GAO to review issues related to fraud risk management for ACA advance premium tax credits (APTC). To do so, the GAO created 20 fictitious identities and submitted applications for health care coverage in the federal ACA Marketplace for plan years 2024 and 2025. The results showed: The ACA Marketplace approved coverage for nearly all of GAO’s fictitious applicants for those years. Centers for Medicare and Medicaid Services (CMS) paid $2,350 per month in tax benefits in November and December 2024 for four fictitious enrollees submitted in October 2024. Of 20 fictitious applicants, 18 remained actively covered as of September 2025. These 18 enrollees earned tax credits totaling more than $10,000 per month. The GAO also identified vulnerabilities related to SSN misuse. “Preliminary results from GAO's ongoing covert testing suggest fraud risks in the advance premium tax credit (APTC) persist,” the GAO concluded. The GAO made the same determinations when it conducted similar studies in 2014 and 2016. Why it matters Congress battled for months about extending the benefits or replacing them with other options, like Health Savings Account expansion. According to the Committee for a Responsible Federal Budget, the gross cost to federal taxpayers for ACA subsidies grew from $18 billion in 2014, the first year in which individuals were eligible for the subsidies, to an estimated $138 billion in 2025. According to data from the Congressional Budget Office and the U.S. House Committee on Energy and Commerce, a permanent extension of ACA tax subsidies would cost taxpayers approximately $335 billion to $383 billion over 10 years. A two-year extension would cost about $60 billion. Congress may consider a three-year extension in January. Additional details According to the GAO report, in 2024, CMS paid nearly $124 billion in premium tax credits to nearly 19.5 million enrollees. That same year, CMS said it received roughly 275,000 complaints from enrolled consumers who had changes to their plans made without their consent. A Paragon Institute report issued this past October found widespread abuse in the ACA marketplace — millions of improper enrollees and “phantom enrollees” drove up taxpayer costs without delivering meaningful health coverage. SUGGESTED STORIES Justice Department announces $14B in healthcare fraud ‘takedown’ The U.S. Department of Justice has broken up a series of allegedly fraudulent schemes in the health sector worth more than $14 billion — a move that foreshadows a wider crackdown by the Trump administration on potential fraud and waste in taxpayer-funded health care programs. Dubbed Read more Nearly one in four breast cancers diagnosed in women under 50, new study says A new study reveals a concerning rise in breast cancer among women under 50. Between 2014 and 2024, women ages 18 to 49 accounted for roughly 20% to 24% of all breast cancers diagnosed across seven outpatient facilities in New York. While they represented about a qu Read more Republicans must hold the line on ending expanded Obamacare subsidies Congressional Republicans should heed President Trump's advice to "hold the line on the shutdown” and resist efforts to extend the temporary COVID-era Obamacare subsidies. Negotiating with Sen. Chuck Schumer and Senate Democrats on these subsidies not only puts our country Read more
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