Taxpayers will foot the bill for up to $25 billion in improper Affordable Care Act (ACA) payments due to organized fraud and improper enrollments in 2026, according to a June 3 report from Paragon Health Institute.
Some 6.2 million enrollments in the healthcare exchanges during the most recent open enrollment period were improper, the report states, accounting for 27 percent of all enrollments.
The conservative think tank has studied fraud related to the ACA—former President Barack Obama’s healthcare law, also known as Obamacare—since 2024.
The problem of improper enrollments persists despite recent attempts to curtail it, and appears to involve organized efforts by unscrupulous insurance brokers, the report concludes.
Meanwhile, some industry groups have criticized the findings.
Incentives for Fraud
Obamacare’s premium subsidies, which cover 100 percent of the health coverage policy for many beneficiaries, and referral bonuses offer an incentive for both enrollees and brokers to abuse the system, the report states.
Researchers identified improper enrollments by comparing Obamacare data to Census Bureau population estimates. The improper enrollments were calculated by a state-by-state comparison of enrollments in the lowest income category to the number of people having that income level in the state.
The lowest income category is 100 percent to 150 percent of the federal poverty level, or about $16,000 to $24,000 per year for an individual or about $27,000 to $41,000 for a family of three.
Enrollees with incomes at that level receive the highest subsidies. During the 2026 open enrollment period, 29 percent of enrollees chose a plan with a zero-dollar premium.
That gives enrollees and the agents who sign people up for Obamacare an incentive to misstate their income, the report reads.
The American Hospital Association has said Paragon’s research results are not valid because the methodology was flawed.
“The Census uses different income and household size definitions than the Marketplace so there is no possibility of the data matching,” the group said in an August 2025 statement. The association also said the Census Bureau relies on reported income but that Obamacare asks for projected income.
The total value of Obamacare subsidies to be paid in 2026 is $88 billion, according to the Congressional Budget Office.
Agents who enroll individuals or families in Obamacare earn a commission averaging about $20 per enrollee per month for as long as the policy is active.
Obamacare received more than 23 million enrollments during the 2026 open enrollment period.
Subsidies and commissions are paid on “effectuated” enrollments, meaning enrollees who selected a plan and paid the initial premium.
The number of effectuated enrollments for 2026 has not yet been released, although about 96 percent of sign-ups became effectuated enrollments in 2025.
Weak Controls
Congress allowed Obamacare’s enhanced subsidies to expire in 2025, which reduced the number of people eligible for a 100 percent subsidy.
Yet improper enrollments persist in part because of automatic reenrollment, said Brian Blase, Paragon’s founder and president.
“Automatic re-enrollment remains pervasive,” Blase told The Epoch Times by email. “Nearly 40 percent of 2026 exchange enrollees were automatically re-enrolled.”
That allows previous improper enrollments to carry over from year to year.
Congress and the Trump administration have taken actions to strengthen checks on improper enrollment, but most are not yet in effect.
Enacted law will require annual income eligibility verification. That takes effect in 2028.
The administration implemented stricter verification rules in May, but they did not affect the 2026 open enrollment period, which ended on Jan. 15.
Legal Action Center, a human rights advocacy group, has opposed mandatory reenrollment and income verification because it places an administrative burden on those dealing with substance abuse, mental health conditions, or criminal convictions.
“There is an ongoing need for an automatic re-enrollment mechanism, given that some people do not actively return to the Marketplace to make plan choices during open enrollment,” the group wrote to Health Secretary Robert F. Kennedy Jr. in April 2025.
Legal Action Center said that rather than requiring action on the part of enrollees, the federal government should verify continued eligibility using existing data such as the Social Security Administration and state unemployment databases.
Bad Actors
Unscrupulous brokers appear to have contributed to improper enrollments by steering consumers toward plans that pay larger commissions, Blase said. And the report suggests that some agents have created fictitious enrollments.
“Some brokers and agents continue steering low-income enrollees into $0-premium plans,” Blase said, even though it may not provide them the best value.
Bronze plans have no premium for an enrollee at 100 percent of the federal poverty level. But the out-of-pocket costs could total nearly $7,500 per year, according to Paragon.
The same individual could qualify for a silver plan, for which the enrollee premium plus out-of-pocket costs totaled $415.
“One plausible explanation is that brokers moved enrollees into $0-premium bronze or gold plans because some consumers will only enroll if coverage is free,” Blase said. “And phantom enrollees cannot pay premiums.”
Paragon defines phantom enrollments as those that are fictitious, or unaware that they are enrolled, or are enrolled in other coverage.
In 2024, 35 percent of Obamacare enrollments reported no medical claims.
“The percentage of zero-claim enrollees in the exchanges is dramatically higher than observed in the broader private market and strongly suggests a substantial number of phantom enrollees,” the Paragon report states.
Also, about half of all enrollees reported unknown race or ethnicity in 2026, a trend that began in 2024, according to the report. Researchers said this could indicate that the agents had little contact with the enrollees.
“These findings suggest that a substantial portion of recent ACA exchange enrollment growth may not reflect legitimate increases in insured individuals,” the report states.
AHIP, an association of health insurers, has been critical of Paragon’s previous research on phantom enrollees.
“A ‘no-claims’ year is evidence that a consumer stayed healthy or only had a few months of coverage—not that taxpayer money was misdirected or that their policy was illegitimate,” the group said in an August 2025 statement.
