GAO Report Reveals Fraud and Payment Issues in Obamacare Marketplaces

A recent Government Accountability Office (GAO) report highlights significant fraud and improper payments within the federal Affordable Care Act (ACA) marketplace, commonly known as Obamacare, impacting taxpayer funds. The GAO's investigation involved submitting fictitious applications to the ACA marketplace, revealing that over 95% were approved and enrolled despite fraudulent identities, leading to insurance companies receiving millions in unwarranted subsidies. Fraud detection mechanisms within the ACA system frequently failed, with cases of false income verifications and a lack of reconciliation between Social Security numbers and tax data, resulting in approximately $21 billion of questionable tax credits in 2023 alone. The report also uncovered instances of Social Security numbers being used for multiple enrollments, including thousands linked to deceased individuals, which nonetheless generated payments for brokers and insurers. Unauthorized plan changes by brokers were also a significant issue, with at least 160,000 applicants affected in 2024 leading to complaints filed with CMS about changes made without consent. These findings underscore systemic vulnerabilities in the ACA marketplace related to oversight, identity verification, and broker conduct, highlighting the need for enhanced regulatory and compliance measures. The broader context involves increasing improper payment rates across federal programs, with recent federal audits identifying excessive levels of fraud and waste in healthcare subsidies and Medicaid programs. Lawmakers face challenges in curbing these abuses without extending temporary subsidies introduced during the COVID-19 pandemic, which have expanded federal spending and allowed for profit gains by insurance companies through inflated subsidies. Strengthened verification processes and policy reforms aimed at limiting fraudulent payments could mitigate financial risk to the federal health insurance system. Overall, the GAO report provides critical insights into the operational weaknesses of the ACA marketplace and points to the importance of balancing accessibility with rigorous fraud prevention to safeguard taxpayer investment and improve system integrity.