Watchdog Uncovers Massive Fraud, Waste in Obamacare Insurance Tax Credits

For plan year 2024, GAO identified nearly 66,000 Social Security numbers that had more than 366 days of coverage.

Signs for Obamacare health insurance plans next to a fence in Columbia, S.C., on Jan. 28, 2023. Shannon Stapleton/Reuters

An analysis of the Patient Protection and Affordable Care Act (PPACA), commonly known as Obamacare, has unveiled massive fraud that could be costing U.S. taxpayers billions of dollars, the Government Accountability Office (GAO) said in a report released on Dec. 3.

Under the program, the federal government pays credits to health insurance companies, called advance premium tax credit (APTC), on behalf of eligible Obamacare participants to reduce their monthly premium payments. In plan year 2024, almost $124 billion in such credits is estimated to have been paid out to insurance companies, accounting for about 19.5 million enrollees.

The GAO report identified instances of Social Security number (SSN) abuse involving identity theft and similar fraudulent practices.

GAO’s analysis identified more than 29,000 SSNs that had insurance coverage with APTC for more than 365 days in plan year 2023, suggesting that these social security numbers could be used by multiple Obamacare enrollees.

“The most frequently used SSN in plan year 2023 was used to receive subsidized insurance coverage for over 26,000 days (over 71 years of coverage) across over 125 insurance policies,” the report reads.

For plan year 2024, the GAO identified almost 66,000 SSNs that had more than 366 days of coverage.

“This overuse can occur because of identity theft and synthetic identity fraud, as well as data entry errors,” the agency stated.

The report also revealed that the SSNs of deceased individuals were being used to get benefits.

For plan year 2023, the agency identified more than 58,000 SSNs that received APTC and matched with death data from the Social Security Administration.

GAO conducted an analysis of 26,000 out of the 58,000 SSNs of dead people, estimating that the Centers for Medicare and Medicaid Services paid more than $94 million in APTC credits.

In a Dec. 3 statement, the House Ways and Means Committee said the GAO investigation reveals “large-scale systemic failures” that enable Obamacare subsidies to be obtained via fake identities, improper use of SSNs, and dead people.

This not only results in wasteful federal spending on enrollees who are ineligible for the program but also causes harm and unexpected costs for people, including the loss of access to medical providers and higher copayments, according to the statement.

It highlighted that $21 billion in subsidies were paid out in 2023 without any evidence of tax reconciliation, accounting for a third of all APTC paid on behalf of identifiable SSN holders that year.

“GAO’s troubling report is the smoking gun that shows how this broken system, shielded by Democrat policies, has led to the federal government shoveling tens of billions of tax dollars to insurance companies through identity fraud and caused health care costs to skyrocket for all Americans,” committee Chair Jason Smith (R-Mo.) said.

“Patients are suffering. They face higher health care costs and denied claims or delayed care when their providers struggle to verify which insurance is valid due to these fraud schemes. Rather than simply rubber-stamp more bad spending and failed policies, we must take action to prevent further harm.”

Fraud Risks

In its analysis, the GAO examined the effectiveness of the program’s enrollment controls in tackling fraud risks. Investigators created 20 fictitious identities and submitted fake applications for individual health care coverage via the federal marketplace, where insurance plans can be purchased under PPACA.

The GAO sent applications for four of these fictitious identities in October 2024.

“The federal Marketplace approved fully subsidized insurance coverage for all four of our fictitious applicants for November through December 2024. The combined total amount of APTC paid to insurance companies for all four fictitious enrollees was about $2,350 per month,” the report reads.

The analysis detected identity verification loopholes in the federal marketplace.

Out of the four applications, two were sent via the HealthCare.gov site. Although the two applications initially failed the online identity proofing step, they were cleared to proceed after fictitious identification documents were submitted.

The remaining two applications were submitted by brokers, who worked with the federal marketplace call center to successfully submit both applications despite an invalid SSN provided by the GAO, according to the report.

For plan year 2025, the GAO had applied for health coverage for all 20 fictitious identities. The marketplace initially approved coverage for 19. As of September 2025, coverage for 18 applications remained active.

“The combined APTC paid to insurance companies for these 18 enrollees totals over $10,000 per month,” the report reads.

“While these fictitious enrollees are not generalizable to the universe of enrollees, they can suggest weaknesses in enrollment controls.”

Direct Payments

The GAO report comes as Democrats are pushing to extend the enhanced Obamacare tax credits before they expire by the end of December.

“Tens of millions of Americans are about to experience dramatically increased healthcare costs” if Congress does not act, House Democratic Leader Hakeem Jeffries (D-N.Y.) said during a Dec. 1 news conference, saying Democrats are backing a three-year extension of the subsidies.

In a separate letter to lawmakers that day, Jeffries blamed Republicans for refusing to “extend the Affordable Care Act tax credits” and thus creating an impending health care crisis.

In a Nov. 8 post on Truth Social, President Donald Trump floated the idea of giving low- and middle-income Americans a direct $2,000 payment rather than subsidizing insurance companies. This would allow people to buy their own insurance, he said.

“In other words, take from the BIG, BAD Insurance Companies, give it to the people, and terminate, per Dollar spent, the worst Healthcare anywhere in the World, ObamaCare,” he wrote.

Speaking to reporters on Nov. 14, Trump said the White House was discussing the idea with lawmakers, noting that he has had “personal talks with some Democrats.”