GAO Report Reveals Widespread Fraud in ACA Marketplace Amid Subsidy Debate

A recent Government Accountability Office (GAO) report has identified widespread fraud and systemic vulnerabilities within the Affordable Care Act (ACA) marketplace amid ongoing political debates regarding the extension of enhanced premium subsidies. The investigation revealed that fabricated identities, invalid Social Security numbers, and deceased individuals were routinely approved for taxpayer-funded ACA subsidies, raising significant concerns about program integrity and oversight. Notably, every application submitted with fraudulent or invalid Social Security numbers in late 2024 was approved for coverage, highlighting serious enforcement gaps. The report also uncovered instances of Social Security numbers being used repeatedly to obtain coverage far beyond plausible limits, as well as cases where subsidies were paid for deceased beneficiaries, amounting to substantial improper payments. These findings coincide with broader discussions in Congress about the future of ACA premium subsidies, which currently benefit millions but are set to expire at the end of 2025. Originally designed for households earning between 100 to 400 percent of the federal poverty level, subsidy enhancements removed the upper income cap and increased benefits, including zero-premium plans for lower-income enrollees. However, fraud appears concentrated among those qualifying for zero-premium plans, with evidence that some sign-ups exceed eligible populations in certain states. The Centers for Medicare and Medicaid Services (CMS), the agency overseeing ACA marketplaces, reportedly lacks mechanisms to prevent multiple enrollments using the same Social Security number, underscoring regulatory and compliance challenges. This report adds fuel to partisan debates, with critics citing ACA’s structural weaknesses and increased costs for taxpayers, while advocates emphasize the risk of premium hikes and coverage losses if subsidies lapse. Premiums are forecasted to rise roughly 20 percent in 2026 absent subsidy extensions, although analyses suggest that expiring subsidies contribute a relatively small portion to overall premium increases. The findings underscore the need for strengthened verification processes and systemic reforms within federal health insurance programs to safeguard taxpayer funds and ensure marketplace integrity.