GAO Uncovers Vulnerabilities and Fraud Risks in ACA Subsidized Enrollment

A recent investigation by the U.S. Government Accountability Office (GAO) revealed significant vulnerabilities in the Affordable Care Act (ACA) exchanges that allow fraudulent enrollments in subsidized health insurance plans. By creating 20 fictitious applicants, GAO investigators were able to successfully enroll 18 in subsidized coverage, highlighting lapses in identity verification and application integrity controls. This finding exposes structural weaknesses that challenge fraud detection and prevention within ACA marketplaces. The report also found that over $21 billion in subsidies were disbursed in 2023 without proper income verification alignment, raising concerns about improper payments. Notably, thousands of Social Security numbers were linked to extended or duplicate enrollments, some extending decades, indicating potential synthetic identity fraud or identity misuse. The GAO flagged that subsidies worth approximately $94 million were directed to households associated with deceased individuals, revealing gaps in the ongoing enrollment verification process. Insurance brokers and agents, who operate commission-based and facilitate enrollment, were identified as contributing factors to irregular activities. The GAO noted over 30,000 application changes in 2023 and 160,000 in 2024 that may involve unauthorized modifications, including enrollments without consumer consent or fictitious enrollments. Moreover, brokers previously suspended due to suspicious conduct have been reinstated, adding complexity to regulatory oversight. CMS officials acknowledged some of these challenges but maintain current procedures aim to balance access with fraud prevention, including multi-layered data matching and ongoing monitoring. Despite these controls, the GAO’s continued evaluation reinforces the need for improved audit practices and system enhancements to curb fraud risks. This GAO report has become a focal point in ongoing political debates surrounding the extension of enhanced ACA subsidies, which are set to expire at the end of 2024. These subsidies have expanded access and affordability for millions but face opposition partly fueled by fraud concerns exposed in this investigation. Discontinuation of subsidies could result in significant premium increases and coverage losses for millions of Americans. In summary, the GAO findings underline critical compliance and integrity vulnerabilities in the ACA exchanges that impact federal subsidy expenditures and insurance market stability. The report's insights prompt consideration of strengthened regulatory frameworks and enforcement strategies to secure marketplace operations amid high-stakes policy discussions on future subsidy provisions.