A Paragon Health Institute analysis estimates that millions of Affordable Care Act exchange enrollments may be improper as federal subsidies expire and officials review marketplace integrity.
By yourNEWS Media Newsroom
A new study from the Paragon Health Institute estimates that improper enrollment in Affordable Care Act exchanges could cost taxpayers as much as $25 billion in 2026, raising new questions about subsidy payments, verification systems and the integrity of the federal health insurance marketplace.
The report, released Tuesday, found that about 6.2 million ACA exchange sign-ups in 2026 may be improper. That figure represents nearly 27% of all exchange enrollment, according to the study, which projects that improper subsidies could account for almost one-quarter of total ACA subsidy spending this year.
The Persistent Obamacare Enrollment Fraud RELEASE V1 by yourNEWS Media
Paragon President Brian Blase said the problem stems from a combination of expanded subsidies, weak oversight and enrollment systems that allow sign-ups to continue even when eligibility is questionable.
“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,” 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.”
The analysis used 2026 open enrollment data and Census Bureau population estimates to examine where improper enrollment appeared most concentrated. Paragon found that the issue was especially pronounced in states using the federal HealthCare.gov platform. In those states, 56% of sign-ups during the 2026 open enrollment period claimed the lowest income category eligible for maximum subsidies, according to the report.
“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,” the report said.
The findings come as ACA marketplace enrollment is already declining after enhanced federal subsidies expired. Reports have shown exchange sign-ups falling nationwide, with some states also seeing enrollment drops as subsidy changes take effect.
KFF estimated in May that plan sign-ups declined by more than 1 million during the 2026 Open Enrollment Period, falling to 23.1 million people. That marked the steepest single-year decline since the ACA marketplaces began, according to KFF’s analysis.
The Centers for Medicare and Medicaid Services has also raised concerns about the legitimacy of some ACA enrollments. CMS Administrator Mehmet Oz addressed the issue Tuesday during a White House press briefing.
“We believe that 35%, roughly, of the people that are using Obamacare exchanges … may not be legit,” Oz said. “And that actual number may translate to 5-6 million people we could be paying premiums for.”
The Paragon report argues that future enrollment declines may not necessarily reflect large numbers of eligible Americans losing real coverage. Instead, the study says a significant share of the drop could come from removing duplicate, unauthorized or inactive enrollments that were improperly receiving taxpayer-funded subsidies.
The report places new attention on verification practices within the ACA exchanges, particularly income checks, identity controls, automatic re-enrollment and broker incentives. It also adds to a broader policy fight over whether federal health subsidies expanded during the COVID era created conditions for large-scale improper payments.
With billions of taxpayer dollars at stake, the study’s findings are likely to intensify debate over how aggressively the Trump administration should tighten eligibility reviews, audit exchange enrollment and recover improper subsidy payments.