GOP Claims ACA’s ‘Phantom’ Enrollees, Data Suggests Otherwise

Fraud Accusations Surround Affordable Care Act Marketplaces

Recently, the Affordable Care Act (ACA) marketplaces have been at the center of a debate about potential fraudulent activities. This has been fueled primarily by claims from Republican lawmakers, who argue that the ACA marketplaces are victims of widespread fraud. This argument comes into play as they discuss whether to extend the enhanced tax credits that are currently aiding low to middle-income individuals with health care marketplace coverage. These credits are set to expire at the end of this year, causing a significant dispute about government funding.

Vice President JD Vance, in a recent CBS News interview, stated, “The tax credits go to some people deservedly. And we think the tax credits actually go to a lot of waste and fraud within the insurance industry”. Vance expressed the desire to ensure that the tax credits reach those who truly need them.

Republican Claims Supported by Paragon Health Institute Report

The Republican argument of fraud hinges on a report published by the Republican-aligned think tank, the Paragon Health Institute. This report focuses on the existence of “phantom enrollees” within the ACA marketplaces. Brian Blase, Paragon president, commented that these enrollees, who do not use any medical care throughout the year, exceed the percentage typically seen in a functional health insurance market.

Blase and his team used data from the Centers for Medicare & Medicaid Services, released in August, to estimate the percentage of zero-claim enrollees in the ACA marketplace. However, the data’s accuracy is under scrutiny as it tracks plan enrollments rather than individual enrollees, potentially resulting in double counting if enrollees switch plans during the year.

According to the analyzed data, there was a significant increase in enrollments without any medical claims, from 19% in 2021 to 35% in 2024. To Blase and Paragon, this rise in zero-claim enrollments is an indication of fraud, suggesting rogue insurance brokers are creating enrollments for non-existent individuals or people who do not qualify or already possess other insurance and therefore do not need ACA coverage.

Fraudulent Practices and the Impact of ACA Subsidies

In 2021, then-President Joe Biden signed into law the American Rescue Plan Act, which featured enhanced ACA subsidies. These subsidies, which made low-cost or free plans available to certain low-income individuals and expanded subsidy eligibility to include some middle-income people, were extended until 2025 under the Inflation Reduction Act of 2022. However, news stories highlight how easy it could be for insurance brokers in some states to sign up people for zero-cost ACA insurance plans without their knowledge — a practice which the Department of Health and Human Services has been attempting to combat.

However, health policy experts caution against drawing hasty conclusions based on the number of zero-claim enrollees. They point out that there might be various plausible reasons behind these figures, such as increased plan-switching due to extended open enrollment periods and partial-year enrollments.

Future of ACA Subsidies and the Government Shutdown

As the end of the year draws near, the expiry of the current ACA subsidies has led to a standstill in the federal government. While Democrats advocate for the extension of these subsidies, Republicans argue against it, citing prevalent fraud in the program. The discord between the two factions has resulted in a government shutdown, and the future of the ACA subsidies hangs in the balance.