Taxpayers Lost $65 BILLION in Obamacare Fraud

A new report says taxpayers got fleeced for 65 billion dollars in healthcare fraud. The government knows what's going on, but seems powerless to stop it. So just how does this scam work? Stay tuned to find out. Welcome to American Government, I'm Chris Chappell. Last week, the Paragon Health Institute, a DC-based health policy think tank, released this report, claiming that fraud and abuse within the Affordable Care Act, aka Obamacare, and its Medicaid expansion cost taxpayers 65 billion dollars in 2024. According to the report, these programs were used to cover huge numbers of people who either didn't qualify, were enrolled more than once, or straight up didn't exist. Just how many are we talking about here? Around 14.3 million, or roughly a third of everyone on the ACA marketplace. Now I just need to be clear about something. These are estimates. It's possible that these numbers are way off, and the amount of waste, fraud, and abuse going on isn't that bad. Maybe the people saying there's nothing to worry about are right, and maybe the moon is made of cheese. I suppose we should ask the question, just how vulnerable are these programs? Well in December of 2025, the Government Accountability Office, Congress's independent watchdog, released this report. It details how the GAO went about testing the ACA's enrollment system. Think of it as kind of an undercover sting operation. Agents built fictitious identities, fake names, fake documents, and invalid social security numbers. Then they applied for subsidized health coverage through healthcare.gov, the same way any American would. Some applications were sent directly through the online portal, and others were sent through brokers. The goal was to test the system's enrollment controls and see if it would flag anything suspicious. And the results were not good. For Plan Year 2024, they submitted four applications, and all four got approved. They all got flagged in the system, but none were denied. In some cases, they weren't even asked to provide documentation verifying their income or citizenship. For 2025, GAO scaled it up. They submitted 20 fake applications this time, with the Federal Marketplace initially approving coverage for 19 out of 20 fictitious applicants. And as of September of that year, 18 were still receiving coverage. Combine both rounds of tests, and you get 23 approvals out of 24 applications. So basically, Guy Incognito over here had a 96% chance of getting his fake application through and receiving the subsidized healthcare you helped pay for. Oh, and I should also probably note, the investigation wasn't just limited to whether or not fake people could get approved. They also looked into how many dead people were getting coverage. They found 26,000 social security numbers attached to dead people were used to get coverage in 2023. And the households associated with those numbers received a combined $94 million in tax credits. Now, maybe this is all just a misunderstanding. Maybe those people got approved for the tax credits and then, you know, died. But that doesn't seem to be what's happening here. A majority of those social security numbers, 19,000, only match up with the death data, meaning that the enrollees' names or birthdays are different from those of the deceased. GAO said this could indicate so-called synthetic identity fraud, in which real data is combined with fake information to give it a veneer of authenticity. That's horrifying. Fraudsters are out there stitching together fake identities with parts taken from dead people. It's like Frankenstein's monster. And that monster wants cheap health care. So why is this being allowed to happen? How could the government be so blind to the fraud happening right in front of its eyes? Well, back in 2021, Congress passed the American Rescue Plan, a $1.9 trillion COVID stimulus package. Buried inside it was a provision that removed the income cap on Obamacare subsidies. That and other changes would allow even more enrollees to pay nothing in premiums. This was supposed to be temporary relief. Congress extended it in 2022 through the Inflation Reduction Act, locking it in through the end of 2025. And in that time, enrollment exploded from 11.4 million people to over 24 million by 2025, more than double the pre-pandemic level. Now more people getting health care doesn't sound like a bad thing. But it changes the math when it comes to incentivizing fraud. By 2025, more than 10 million enrollees, 46 percent of those receiving aid, paid $10 or less per month out of pocket for premiums. And about 8 million paid nothing. I mean, it's kind of a no-brainer. If you can submit a fake application that's got a 96 percent chance of being approved and pay your $5 or $10 a month, you're golden, you just saved yourself thousands of dollars on health care. A zero-dollar plan is even better. Those don't even send you a monthly bill. One of the only paper trails is a tax form that shows up once a year. And that form only means something if the person it's addressed to actually exists. And it's not just individuals who can get in on the action. Insurance companies can grab a piece of the pie, too. See, when someone enrolls in a subsidized ACA plan, the government pays the subsidy directly to the insurer, regardless of whether that person ever uses the coverage. It doesn't matter if they ever see a doctor. And apparently it doesn't even matter if they're real. In 2024 alone, insurers collected $35 billion in premiums for exchange enrollees who never used their plan. $35 billion for nothing. That's a pretty sweet deal from the insurer's perspective. I mean, they're getting paid either way. And why spend all that time and money to audit your own list of enrollees when you could just not? And then there are the brokers. Like I said, some ACA plans got so heavily subsidized during the Covid years that they cost enrollees zero dollars a month. What this meant is that a broker could sign someone up without their knowledge and collect a commission. All while the quote-unquote customer never even finds out they've been enrolled. So these brokers can get paid to open an account nobody asked for on behalf of a person who never wanted it and who might not ever notice. On top of all that, ACA plans automatically re-enroll every year unless you cancel them. So a fictitious account once created can just keep going. At least until someone happens to notice, which, as we've just seen, is a big if. None of this requires some grand conspiracy to work. It just needs an incentive structure, where the parties who could verify the applicant have little incentive to do so. The enrollee gets their premiums paid. The insurer gets paid. The broker gets paid. And the government? Well, who cares? It's not their money. Really, the only party who loses out in all this is you. The taxpayer. Okay, so we've got the mechanism down, but what about that number we talked about earlier? The $65 billion? How did they come up with that number? Paragon's estimate includes both ACA marketplace fraud and improper Medicaid expansion enrollment. The ACA side puts the cost at $22.3 billion based on an estimated 5.1 million improper enrollees. Their Medicaid estimate is separate and significantly larger—$32.9 billion based on 9.2 million people. Add those two numbers together and you get $55.2 billion. But Paragon's headline number is $65 billion. Why the gap? Well, Paragon says if you only fixed Medicaid, some of those improperly enrolled people would just improperly enroll on the exchange instead. So fixing one program doesn't give you back the full amount. Fix both at once, and $65 billion is the amount you'd save. We can debate the exact numbers all day, but it's kind of missing the forest for the trees. The GAO already proved just how vulnerable these government exchanges are. Which brings us to California. I know, how could I not bring up California? When Paragon's report dropped, Covered California, the state's own marketplace, felt the need to chime in. And they stated unequivocally that there is no evidence of systemic fraud, waste, or abuse in state-based marketplaces. That's great, California, I'm happy for you. Well, unless you consider the fact that the GAO already tested California with the same damn kind of sting operations we've been talking about. Back in 2015 and 2016, investigators submitted fictitious applications directly through California's own exchange and got the coverage approved. Their conclusion? The healthcare marketplace's eligibility determination and enrollment processes remain vulnerable to fraud. Next time, California, just don't say anything. So here's where we are. Obamacare's verification system has more holes than one of those frogs that gives birth out of its back. The GAO has proven that over and over across federal and state exchanges alike. And the incentive structure that encourages fraud isn't some big mystery, either. Insurers and brokers get paid whether the person's real or not, alive or dead, so nobody has a reason to check. And one signal that might catch fraud—an unused plan—looks identical to a healthy person doing nothing wrong. That's not a conspiracy per se. There's no big cover-up. It's just a combination of greed, laziness, and general incompetence on the part of the government. So, you know, the American way. But what do you think? Leave your comments below. I do read as many as I can. But I read every comment on AmericaUncovered.tv, where you'll get access to thousands of episodes ad-free, plus a community chat, livestreams, and more. Just click this button here or the link below. Once again, I'm Chris Chappell. Thank you for watching America Uncovered.