GAO Finds Significant Fraud Risks in ACA Subsidy Programs

A recent U.S. Government Accountability Office (GAO) report has revealed extensive fraud associated with Affordable Care Act (ACA) marketplace subsidies, particularly the Advance Premium Tax Credit (APTC). The report was initiated by House Republican leaders who highlighted that fraudulent applicants received unjustified subsidies, with 100% of fictitious cases approved and a majority continuing coverage into 2025. These findings underscore concerns about the integrity of ACA subsidies and the challenges in managing subsidy-related fraud. The GAO investigation employed covert operations, including the use of fictitious identities, demonstrating systemic vulnerabilities in subsidy approval processes managed by the Centers for Medicare & Medicaid Services (CMS). Previous analyses from the Congressional Budget Office also estimated billions in improper payments related to ACA enrollment irregularities. This ongoing fraud contributes to increasing healthcare costs and complicates provider verification processes. Republican lawmakers have focused on reforming the ACA subsidy system to enhance eligibility verification, close enrollment loopholes, and prevent misuse by ineligible individuals. Proposals include full income verification before subsidy distribution and restricting enrollment periods to reduce fraud risks. There is also advocacy for redirecting federal healthcare funds directly to individuals rather than insurers, aiming to increase consumer control and market competition. The report's findings may influence future healthcare policy debates, particularly regarding subsidy program design and fraud prevention mechanisms. The expiration of enhanced premium tax credits at the end of 2025 could further impact marketplace dynamics and insurance affordability. Stakeholders in the health insurance sector, including payers and providers, face ongoing challenges in balancing cost controls with assuring access and compliance. Overall, the GAO report adds to the body of evidence prompting calls for increased regulatory oversight and structural reforms to the ACA marketplace subsidy framework. Insurers and policymakers will need to address fraud vulnerabilities to improve program integrity, maintain market stability, and ensure efficient use of taxpayer funds in the U.S. healthcare system.