Paragon Health Reports $27B ACA Enrollment Fraud Surge in 15 States

A recent report by Paragon Health Institute reveals a significant rise in enrollment fraud within the Affordable Care Act (ACA) marketplace, with ineligible enrollees increasing by over 25% from 2024 to 2025, totaling 6.4 million individuals. This surge is primarily driven by applicants, brokers, and insurers misrepresenting income to access fully subsidized ACA plans available to those earning between 100% and 150% of the federal poverty level (FPL). The resulting taxpayer cost of this fraudulent enrollment is projected to reach $27 billion in 2025 alone.

The report highlights that in 15 states, including Arizona, Florida, Texas, and others, the number of enrollees claiming eligibility exceeds the actual eligible population by more than double. The analysis attributes these trends to policy decisions favoring enrollment numbers over program integrity, such as lax income verification processes, automatic re-enrollment features, enhanced subsidies, and limited subsidy recapture mechanisms.

Paragon's investigation points to systemic incentives encouraging misreported income: insurers benefit financially from increased enrollment and subsidies while brokers gain larger commissions. The current HealthCare.gov direct enrollment system allows third-party brokers to enroll individuals with minimal verification, often without consumer interaction, raising concerns about unauthorized or redundant enrollments.

This enrollment fraud manifests differently across Medicaid expansion and non-expansion states, reflecting disparities in verification and enrollment practices. Paragon Health Institute's research underscores the need for enhanced regulatory oversight and stricter eligibility verification within ACA marketplaces to mitigate fraud and reduce unnecessary government expenditure.

Paragon Health Institute is an independent nonprofit dedicated to health policy research and market-based policy proposals, funded by foundations and private donors without industry funding or lobbying activities. Their findings provide critical insights for policymakers, regulators, insurers, and brokers on improving ACA program integrity and financial sustainability.