GAO Report Identifies Fraud Risks in ACA Premium Subsidy Payments

A recent Government Accountability Office (GAO) report has exposed significant vulnerabilities in the federal health insurance exchanges created by the Affordable Care Act (ACA), revealing that fraudulent enrollments have led to improper premium subsidy payments. The GAO's investigation involved creating fictitious identities that were able to enroll successfully and receive advance premium tax credits (APTC), highlighting gaps in the Centers for Medicare and Medicaid Services’ (CMS) fraud prevention mechanisms. These vulnerabilities include failures in identity verification steps and misuse of Social Security numbers, which allowed unauthorized coverage changes and subsidy disbursements in 2023 and 2024. The report found that all four fictitious identities submitted for 2024 coverage remained enrolled with ongoing premium subsidies totaling approximately $2,350 monthly per enrollee. For 2025, preliminary findings indicated that 18 out of 20 fake applicants maintained active coverage with combined premium credits exceeding $10,000 monthly. This evidence underscores the challenges faced by CMS in administering ACA marketplaces and controlling subsidy costs amid potential fraud. Republican lawmakers have leveraged the GAO findings to advocate for comprehensive reforms in ACA subsidy policies. Proposals include instituting minimum premium payments to deter "phantom" enrollees, reinstating income eligibility caps removed during the 2021 pandemic-related subsidy expansions, and reinforcing fraud prevention measures. These calls for reform come as Congress debates extending the enhanced subsidies, which have helped keep healthcare premiums affordable for millions. The GAO report's timing is critical, preceding upcoming Senate votes on a yet-to-be-revealed Democratic proposal to renew the enhanced subsidies. While Democrats push for a clean extension, emphasizing the subsidies' role in preventing premium spikes for millions, Republicans consider alternative legislative approaches focusing on curbing fraud. House efforts include a discharge petition to force a vote on a three-year extension, battling divided stances within both parties. This report highlights systemic risks within ACA marketplace administration, emphasizing the need for strengthened identity verification, fraud detection, and regulatory oversight to safeguard taxpayer funds. The evolving policy debate balances the objectives of maintaining expanded subsidy benefits against the imperative to minimize fraudulent claims that strain government resources. Insurance professionals and policymakers should monitor these developments closely, as upcoming legislative actions will shape the future structure and integrity of ACA marketplace programs.