Report: Obamacare Exchange Kept 9 Out Of 10 Fakers Enrolled

In recent months, these pages have recounted myriad reports of fraud in Medicaid and on the Obamacare Exchanges. The Congressional Budget Office and others have noted millions of potentially erroneous or fraudulent enrollees, who are receiving tens of billions of dollars in taxpayer-funded subsidies.

On Wednesday, the Government Accountability Office (GAO) added to the reports pouring in. Its preliminary analysis raised additional questions about fraud relating to Exchange subsidies, providing yet another reason for Congress not to extend the enhanced Covid-era subsidy regime that expires at the end of the month. 

Fictitious Enrollees Receiving Subsidies

Given the recent reports and concerns about fraud, GAO reprised its testing from Obamacare’s early years, where auditors tried to enroll people using fictitious names and identities. Sadly, the auditors note that the current results are “generally consistent with results of similar testing we conducted for plan years 2014 through 2016.”

During the last plan year, GAO noted that “we either were not requested to provide the federal Marketplace [i.e., Exchange] with documentation or generally did not provide what was requested, yet our four fictitious applicants received subsidized coverage for November and December 2024.” In one example, the federal Exchange sent a letter that “confirmed the applicant’s income based on documentation we submitted,” even though GAO had not sent any such documentation.

This year, GAO said the Exchange “initially approved coverage for 19 of our 20 fictitious applicants,” with the only exception being “when the broker we were working with stopped responding to us.” In another case, the Exchange cut off coverage after the fictitious enrollee did not provide citizenship documentation. But in total, nine months into the plan year in September, “coverage for 18 [of 20] fictitious enrollees remained active,” totaling over $10,000 per month in taxpayer subsidies paid to insurers on behalf of nonexistent enrollees.

Widespread Issues of Fraud

A familiar axiom notes that “the plural of ‘anecdote’ is not ‘data.’” Skeptics might use that theory to doubt GAO’s headline finding. Sure, a few government auditors came up with phony identities to get people enrolled, but how widespread is the problem?

Turns out, GAO also did more comprehensive work analyzing government data. Multiple other data points reinforced GAO’s tests using fictitious applicants, raising additional questions about rampant fraud associated with the Exchanges: 

• As of April 2025, enrollees receiving over $21 billion in subsidies — or about 32 percent of subsidies paid on behalf of enrollees who submitted a Social Security number to the federal Exchange in 2023, the most recent year for which data is available — failed to reconcile the subsidies (which are paid in advance of tax filings) they received in 2023 with their actual income by filing a 2023 tax return (normally due April 15, 2024). While there could be an innocent reason why these enrollees did not file a return, it also means that enrollees who (deliberately or otherwise) received more in subsidies than they were entitled to based on their actual income have yet to pay their “extra” subsidy dollars back.
• More than 29,000 Social Security numbers in 2023, and almost 66,000 Social Security numbers in 2024, reported more than 365 days of subsidized insurance coverage, indicating potential fraud associated with those Social Security numbers. In one instance, a single Social Security number was linked to more than 26,000 days (more than 71 years) of subsidized insurance coverage “across over 125 insurance policies” in 2023.
• In 2023, a total of 58,000 Social Security numbers received subsidies yet also matched Social Security Administration death data. These instances included more than 7,000 numbers “where the reported date of death occurred prior to enrollment” in the Exchange, and more than 19,000 numbers where “matches had different names and dates of birth” between the Exchange database and the Social Security Administration database, a potential sign of “synthetic identity fraud.”
• At least 30,000 applications in 2023 and at least 160,000 applications in 2024 “had likely unauthorized changes” made by agents or brokers who engaged in “potential misconduct … seeking to maximize commissions” they would receive for enrolling people in Exchange coverage. GAO cited one real-life example (anonymized in the report) whereby a single individual had his coverage changed 15 separate times by 10 different brokers in a single eight-day span in late 2023.

Need for More Enforcement

The GAO report indicated some preliminary steps toward cracking down on fraud, but thus far, they appear to represent instances of “three steps forward, two steps back.” While the Biden administration did add restrictions to prevent brokers from changing a consumer’s enrollment without their knowledge, GAO noted that “stakeholders we interviewed questioned the effectiveness of the three-way calls to prevent” fraud, because the Exchange may use information to verify a consumer’s identity that is also readily available to fraudsters (e.g., name and date of birth). GAO’s finding that the Centers for Medicare and Medicaid Services (CMS) reinstated 850 agents and brokers suspended last year for suspected fraud raises additional questions, although it is unclear whether the reinstatements occurred under President Biden or Trump.

In response to GAO’s findings, CMS said it would update its fraud assessment for the first time in seven years. Auditors noted that the plan had not been reevaluated since November 2018, even as spending on Exchange subsidies rose from $53 billion in 2018 to almost $124 billion last year. But even the 2018 document did not fully consider all the recommended elements of a fraud risk assessment and did not use that assessment to develop a formal anti-fraud strategy.

Regardless, lawmakers should not spend another $350 billion (plus interest) throwing good taxpayer money after bad, even as one government report after another shows Exchange-related fraud remains out of control. After incurring more than $38 trillion in debt, Washington should finally realize it has run out of other people’s money to spend on such profligacy.