GAO Report Reveals Fraud and Waste Plaguing ACA Marketplace Subsidies

The Government Accountability Office (GAO) released a preliminary report revealing significant systemic vulnerabilities within the Affordable Care Act (ACA) marketplace plans, resulting in widespread waste, fraud, and abuse. The investigation found that fake identities, deceased individuals, and improper use of Social Security numbers have enabled unjustified subsidy payments. GAO's covert operations using fictitious identities demonstrated 100% approval rates for these applicants as recently as late 2024, with 90% continuing to receive coverage into 2025. This evidence highlights major flaws in identity verification and subsidy allocation processes that lead to extensive improper federal spending and increased costs for legitimate consumers. The misuse of subsidies affects consumers by potentially restricting access to medical providers, increasing out-of-pocket expenses, and triggering subsidy repayments due to misrepresented eligibility. Such systemic issues cause financial strain on the federal government and can compromise care delivery and affordability. The report was commissioned by key House committee chairmen concerned about the integrity and sustainability of federal health programs. Findings also indicate instances of a single Social Security number being used across over 125 policies, resembling 71 years’ worth of coverage, as well as ongoing subsidies paid for deceased individuals. Additionally, unauthorized plan switches are growing, further complicating consumer protections and provider verifications. Despite warnings and recommendations, structural deficiencies remain unaddressed, facilitating continued abuse and higher costs. Congressional discussions following the GAO report emphasize the importance of program integrity measures to protect taxpayers and reduce premium costs. Congressional Budget Office (CBO) estimates suggest improper ACA marketplace enrollments could cost taxpayers approximately $27 billion annually. Legislative efforts aimed at strengthening program controls have already delivered estimated savings exceeding $185 billion and modestly decreased premiums, underscoring the potential benefits of enhanced regulatory oversight. This report underscores the critical need for ongoing reforms in ACA marketplace operations, focusing on fraud prevention, identity verification, subsidy allocation, and consumer protections to ensure program stability and affordability for Americans reliant on federal healthcare subsidies.