ACA Enrollment Will Plummet Under Tighter Verification and Reduced Subsidies

by Devon Herrick

 The Wall Street Journal reports that nearly four million Obamacare enrollees dropped coverage once the generous subsidies ended. In 2014 enrollment was just under 13 million. Between 2020 and 2025 enrollment about doubled to 24 million. Part of that could have been worry about the lingering risk of Covid, but generous enhanced subsidies undoubtedly boosted people’s willingness to enroll. Now people are dropping coverage. The following is from WSJ:

A report released by the department’s assistant secretary for planning and evaluation said that an estimated 19.2 million people are enrolled in ACA plans as of February. That would represent a drop-off of more than 16% from approximately 23 million who signed up for ACA coverage during this year’s open enrollment period.

The ACA subsidies were the focus of a political fight that resulted in the longest-ever federal government shutdown last year, with Democrats pushing to retain the payments that they first enacted in 2021. The loss of insurance coverage is likely to be a focus of the November midterm elections.

I enrolled for 2.3 years during the time when enhanced subsidies were available to me. ACA plans were a poor value even after accounting for generous subsidies. However, there may be more to the story than mere subsidies. The Paragon Institute analysis points to widespread fraud.

Misstating income to get a bigger subsidy is a significant problem. Paragon Institute estimates that more than one-quarter of enrollees (27%) are improper. That is about 6.2 million people in 2026. That does not mean the enrollees do not qualify for a subsidy. Rather, it means they improperly stated their income to get a bigger subsidy than they deserve. It is unknown whether all six million would drop coverage if they were forced to reveal their true income. Some undoubtedly would. Here is the thing: the four million who dropped because of the enhanced subsidies ended are not necessarily the same pool of people enrolling improperly. More than half of enrollees (56% in 2026) claim their income is between 100% and 150% of the federal poverty level which provides the greatest subsidy and did not end when enhanced subsidies ended. Enrollment growth has been concentrated among the lowest income segment.

It is thought that unscrupulous brokers and intermediaries are largely behind major increases in enrollment among low-income people. Just over one-third of Obamacare enrollees had zero claims during the year. The figure rises to 40% among low-income enrollers with virtually no cost-sharing. That is implausible. It makes you wonder if millions of Obamacare enrollees even know they have coverage or if brokers just signed them up. Paragon Institute pointed to other evidence that supports the notion that brokers have little information about their enrollees, including a lack of basic information on race.

Why is there widespread fraud in ACA enrollment? Mostly because boosting enrollment is the goal of public health advocates, scrutiny is nonexistent and unscrupulous brokers want to earn a living. Why is widespread Medicaid fraud emerging in Minnesota, Southern California and elsewhere? It is mostly for the same reasons. Why is fraud emerging in the Medicare programs? It is because nobody is trying to enforce the rules. The supporters of government programs like to grow them. The Paragon Institute advises some commonsense improvements to combat ACA enrollment fraud.

• Strengthen eligibility verification
• Tighten automatic re-enrollment procedures and require stronger periodic eligibility re-verification
• Require stronger identity authentication
• Impose tighter oversight on EDE platforms and third-party enrollment entities
• Aggressively investigate and suspend unscrupulous brokers and intermediaries involved in unauthorized enrollment activity
• Reduce subsidy distortions and eliminate zero-premium plan structures that facilitate improper and phantom enrollment.

Between 2020 and 2025 ACA enrollment took off. Most of this was probably improper or at least people unwilling to enroll without huge (often improper) subsidies. The Republican controlled U.S. Department of Health and Human Services has been largely focused on routing out fraud, whereas Democrats want to boost enrollment numbers. This likely makes Democrats and public health advocates more tolerant of phantom enrollees and improper enrollments. 

How many people should be enrolled in Obamacare? Up until 2020 enrollment was 12 million to 13 million. If federal and state agencies tighten compliance the number of ACA Marketplace enrollees will likely fall back to earlier numbers.

https://www.goodmanhealthblog.org/aca-enrollment-will-plummet-under-tighter-verification-and-reduced-subsidies/