Widespread fraud across Affordable Care Act exchanges is projected to cost American taxpayers billions in 2026, according to a Paragon Health Institute report released Tuesday.
The newly released study alleges that approximately 6.2 million or nearly 27% of all ACA exchange sign-ups were improper in 2026. The analysis also estimates U.S. taxpayers will pay up to $25 billion in improper subsidies in 2026, almost a quarter of total projected ACA subsidy spending for the year.
“Despite the expiration of COVID-era subsidy boosts and Trump administration efforts to reverse negligent Biden-era policies, excessive subsidies, zero premium plans, weak verification systems, automatic re-enrollment, and misaligned incentives for enrollment intermediaries have created a perfect storm for improper and phantom enrollments that drain tens of billions from taxpayers while undermining program integrity,” Paragon Health Institute President Brian Blase said in a statement. “The findings also suggest that a significant share of the enrollment declines expected over the next two years will reflect the removal of duplicate, improper, and phantom enrollment rather than losses of legitimate coverage.”
Paragon Health Institute’s report — which analyzes 2026 open enrollment data and Census Bureau population estimates — found that improper enrollment is heavily concentrated in states that use the federal HealthCare.gov platform. In HealthCare.gov states, 56% of sign-ups claimed the lowest income category qualifying for maximum subsidies in the 2026 open enrollment period, according to the study.
“The ACA exchanges cannot function effectively if millions of sign-ups improperly receive taxpayer-funded subsidies and enrollment systems remain vulnerable to unauthorized and phantom enrollment,” according to the report.
The ACA marketplace is reportedly facing a drop in enrollment across the nation in the wake of expiring enhanced federal subsidies. Plan sign-ups declined by more than a million to 23.1 million individuals during the 2026 Open Enrollment Period, marking the steepest single-year drop since the ACA Marketplaces launched, according to KFF estimates released in May.
“We believe that 35%, roughly, of the people that are using Obamacare exchanges … may not be legit,” Centers for Medicare and Medicaid Services (CMS) Administrator Mehmet Oz said Tuesday during a White House press briefing. “And that actual number may translate to 5-6 million people we could be paying premiums for.”
CMS did not immediately respond to the Daily Caller News Foundation’s request for comment.
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