GAO Report Reveals Extensive Fraud Risks in ACA Marketplace Subsidies

A recent report by the U.S. Government Accountability Office (GAO) reveals significant vulnerabilities in the Affordable Care Act (ACA) marketplace concerning fraud and improper subsidy payments. The GAO's undercover testing over two years found that approximately 90% of fraudulent applications for premium subsidies were approved despite lacking essential documentation such as verified Social Security numbers, citizenship status, or income proof. This loophole has enabled some individuals to receive subsidies amounting to nearly $10,000 per month without proper validation. The report also highlights the reuse of Social Security numbers in multiple subsidy claims. For example, in 2024, about 68,000 Social Security numbers were used to obtain more than one year's worth of insurance coverage each. In one extreme case, a single Social Security number was associated with over 125 different policies, cumulatively amounting to coverage for more than 71 years. This points to inadequate identity verification processes within the Centers for Medicare and Medicaid Services (CMS), which manages the ACA marketplace, and an absence of effective safeguards against identity theft and fraud. These systemic weaknesses contribute to an estimated $27 billion annually in fraud, waste, and abuse within the ACA marketplace. Such financial leakage is a significant factor in the sharp increase in premiums, which have risen by 129% since 2014, outpacing costs in the private insurance market. The current policy environment limits insurance options by prohibiting certain types of insurance plans that previously met consumers’ needs, forcing a growing number of Americans to depend on ACA plans despite challenges related to claim denials and quality of care. The ongoing issues have prompted calls from some policymakers for substantial reforms to the ACA marketplace. Critics argue that merely increasing subsidy funding without addressing structural flaws perpetuates inefficiencies and risks the program's long-term sustainability. They advocate for improved fraud detection, reevaluation of coverage restrictions, and reopening alternative insurance options that were disallowed under the ACA. Such measures aim to strengthen the system's integrity, enhance consumer choice, and ensure more efficient use of taxpayer resources. As the ACA continues to be a cornerstone of the U.S. health insurance landscape, these findings underscore the need for enhanced regulatory oversight and compliance mechanisms. Strengthening identity verification protocols, implementing robust anti-fraud measures, and reconsidering marketplace design could support both consumers and insurers. These steps are critical for maintaining the viability of the program and for safeguarding federal investments in health coverage subsidies.