Defrauding the government through Obamacare's insurance exchanges is shockingly easy, per a new government report.
The study found that federal insurance subsidies were granted for 90 percent of the fake exchange accounts set up as part of a Government Accountability Office investigation -- at a cost of more than $10,000 a month.
This new report provides yet more evidence for what has been apparent for years -- that the generous Obamacare premium subsidies established during the pandemic are an invitation to massive fraud that wastes billions in taxpayer money each year.
Republicans in Washington should take note. The enhanced subsidies must expire on schedule at the end of this year. Extending them -- as Democrats are demanding -- would perpetuate taxpayer-funded fraud.
Even before the GAO's bombshell revelation, Republicans had every reason to let the subsidies at the center of the recent government shutdown fiasco expire.
After all, the enhanced premium tax credits were always a short-term, COVID-era fix to a constellation of problems that were apparent when Obamacare was created in 2010 -- and when the exchanges launched in 2014. Obamacare's very structure -- from its 10 essential health benefits mandates for all health plans to its restrictions on what insurers can charge patients based on their health and age -- all but guarantees that premiums rise over time.
And that's exactly what happened. Between 2013, the year before the exchanges opened, and 2026, individual plan premiums tripled.
Instead of addressing the root causes of this premium inflation when they had the chance, the Biden administration and congressional Democrats took another tack -- obscuring the problem with a new layer of subsidies. This hid the consequences of Obamacare from patients and cost taxpayers billions.
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In short, the subsidies remain a band-aid on the deep systemic problems with Obamacare. And for that reason alone, they stand in the way of the kinds of sensible, market-driven health reforms that our nation sorely needs.
But, as the GAO investigation now confirms, there is yet another reason why the enhanced subsidies deserve to expire. The program -- together with years of weak federal oversight -- has transformed the Obamacare exchanges into a cesspool of fraud.
This isn't exactly news, of course. Recent research by the Paragon Health Institute estimated that 12 million Americans enrolled in an exchange plan filed no medical claims last year. That suggests that many of these enrollees were signed up for coverage without their knowledge -- likely by dishonest insurance brokers and agents looking to extract unearned subsidies from the government.
All told, premium subsidies paid to insurance companies on behalf of such "phantom enrollees" totaled $40 billion in 2024.
As a non-partisan federal agency, the GAO's findings only add credence to these claims by showing how astonishingly easy such fraud has become on the exchanges.
The Democrats' insistence on preserving the enhanced subsidies is not just irresponsible but at odds with legislation they wrote in 2022. The architects of the enhanced subsidies explicitly provided that the program was to expire at the end of 2025.
The GOP has no shortage of sensible ideas for expanding access to affordable, high-quality coverage over the long term.
For example, they could look to expand access to short-term, limited-duration health plans, which don't have to comply with Obamacare's mandates and thus tend to be much less expensive than exchange coverage. They could also relax rules governing association health plans, so that self-employed individuals and small businesses can more easily band together to secure better deals on coverage from insurers.
Republicans have a golden opportunity to put at least some of those ideas into action over the next year. Spending many more billions in taxpayer money bailing out Obamacare is the wrong approach.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy -- and How to Keep It (Encounter 2025). Follow her on X @sallypipes.
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