$65B in taxpayer funds tied to millions of potentially improper Obamacare, Medicaid enrollments

WASHINGTON, DC: A new report is putting a staggering price tag on alleged enrollment failures in two of America's largest health insurance programs, estimating that taxpayers spent $65 billion in 2024 on coverage for millions of people who may have been ineligible, improperly enrolled or, in some cases, nonexistent.

The Paragon Health Institute said expanded Medicaid and Affordable Care Act marketplace plans, commonly known as Obamacare, had a combined 14.3 million potentially improper enrollments that year.

The findings have drawn questions from other health policy groups, but a separate federal investigation has documented weaknesses that allowed investigators to create fake identities and obtain subsidized coverage.

Millions may not have qualified

Paragon researchers estimated that more than 9 million people enrolled through Medicaid expansion in 2024 may not have met eligibility requirements.

The report cited possible income, citizenship, immigration, and residency issues, as well as cases involving people who should have been enrolled through traditional Medicaid instead.

The institute also estimated that about 34% of marketplace enrollments were fraudulent, duplicative, or otherwise ineligible. 

Paragon President Brian Blase had previously told Congress that some people were enrolled without their knowledge by brokers seeking commissions, particularly after expanded subsidies created plans with $0 monthly premiums.

The report based its estimates on federal surveys, enrollment records, and spending data.

However, its methodology has faced criticism from analysts who say survey-based estimates do not capture every reason a person may qualify for Medicaid.

Federal probe finds fake identities

A Government Accountability Office investigation released in December 2025 provided a more concrete example of vulnerabilities in the marketplace system.

Investigators successfully enrolled 20 nonexistent identities in Obamacare coverage in 2024 using Social Security numbers that had never been issued and other counterfeit documents.

Eighteen of those accounts remained active as of September 2025, costing taxpayers more than $10,000 a month.

The investigation also identified roughly 26,000 accounts receiving subsidies in 2023 using Social Security numbers matching records in the Social Security Administration's death file.

Those enrollments resulted in more than $94 million in subsidies over one year, according to the findings.

The GAO results do not establish that all of Paragon's estimated improper enrollments were fraudulent, but they confirmed that false identities and questionable documentation had entered the federal marketplace.

Critics challenge scope of estimates

Not everyone agrees with Paragon's estimate of the problem.

Covered California, the state's official marketplace, has said there is no evidence of systemic fraud, waste, or abuse across state-based exchanges.

America's Health Insurance Plans has also pushed back on using a lack of medical claims as evidence of a fraudulent enrollment, noting that people can remain insured without needing medical care. 

The Center on Budget and Policy Priorities has separately argued that people whose reported income appears above Medicaid limits may still qualify under circumstances not captured in surveys.

The competing claims leave the precise scale of improper enrollment disputed, even as federal investigators and agencies acknowledge that verification gaps have existed.

Cleanup efforts target fraudulent accounts

Federal officials have moved to tighten the system by suspending brokers suspected of fraud, restoring data checks designed to catch duplicate coverage and requiring more frequent Medicaid eligibility reviews.

The Centers for Medicare and Medicaid Services said in January that it had removed more than 1 million people who were simultaneously enrolled in marketplace coverage and Medicaid or the Children's Health Insurance Program, or who failed to reconcile earlier subsidies.

Another 250,000 people were removed after being enrolled without their consent.

The agency said those actions generated $10 billion in annual savings.