Regulatory Compliance Challenges for ACA Insurers and Subsidy Fraud Issues
Eight insurance companies offering Affordable Care Act (ACA) exchange plans are currently prioritizing compliance with a recent House Judiciary Committee request. Benefiting from federal subsidies, these insurers are preparing to provide a comprehensive set of documents, as committee members investigate the management of ACA subsidies.
On December 15, 2025, the House Judiciary Committee sent letters to both local and national insurers, with a response deadline of December 29, 2025. This initiative coincides with the impending expiration of enhanced ACA subsidies, driven by concerns about potential fraudulent activities associated with these subsidies.
The ACA enables access to private health insurance via federal subsidies, primarily aiding low-income participants. However, according to the Government Accountability Office (GAO), potential vulnerabilities to fraud exist, such as applicants misrepresenting income to receive larger subsidies or brokers submitting false applications. AI-driven prior authorization delays and underwriting inaccuracies can exacerbate these issues.
During investigations, the GAO submitted fake applications, with nearly all receiving coverage. Discrepancies were discovered when comparing ACA beneficiary data with Social Security records. Alarmingly, many subsidy recipients were linked to deceased individuals’ Social Security numbers, and several payments in 2023 didn't align with IRS tax records. These findings highlight significant compliance challenges in claims and risk management processes.
Regulatory Scrutiny and Industry Response
In light of subsidy mismanagement findings, the Judiciary Committee held a hearing on December 10, 2025, titled “Fighting Obamacare Subsidy Fraud.” Committee Chair Jeff Van Drew expressed concerns over rising costs absorbed by federal funds, regardless of the authenticity of insured individuals. This underscores the need for insurers to tighten regulatory compliance mechanisms.
The requested documents involve significant industry players, such as Blue Shield of California, Centene Corporation, CVS Health, Elevance Health, GuideWell, Health Care Service Corporation, Kaiser Permanente, and Oscar Health, Inc. While the specific reasons for selecting these companies are unspecified, they cover a broad geographic range and include five of the largest ACA insurers, indicating a keen focus on underwriting practices across the payer and provider sectors.
The provision of these documents is unlikely to directly impact discussions surrounding ACA subsidy enhancements. However, it highlights ongoing scrutiny of exchange insurers’ practices. This scenario reinforces the importance of robust internal controls within the insurance industry. The long-term regulatory and operational implications could reshape the dynamics of the ACA marketplace, affecting carriers' approaches to compliance and underwriting.