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What are the latest estimates of fraud, waste, and abuse in ACA marketplace plans (2023–2025)?
Executive summary
CMS and HHS officials and several analyses estimate large-scale “improper” or fraudulent enrollments in ACA Marketplace plans in 2024–2025, with headline figures ranging from roughly 4–5 million affected people and taxpayer costs up to about $20 billion; CMS projects policy changes could reduce improper APTC spending by roughly $11–14 billion by 2027 [1] [2]. Independent analysts and advocacy groups dispute both the scale and the methods behind those estimates and warn that CMS’s integrity rule could cause hundreds of thousands to nearly two million people to lose coverage in 2026 while imposing administrative costs on states and marketplaces [3] [4] [5].
1. The administration’s top-line estimate: millions improperly enrolled
CMS and HHS framed the problem as a dramatic surge in improper enrollments after the post‑2020 subsidy expansions, saying research and complaints indicate about 4 to 5 million people were “improperly enrolled” in subsidized ACA coverage in 2024 at a potential federal cost of roughly $20 billion — language repeated in CMS press material and the Federal Register discussion of the Marketplace Integrity and Affordability rule [1] [2].
2. What CMS expects its rule to save — and when
CMS estimated that the integrity proposals, if implemented, would reduce improper federal spending on advance payments of the premium tax credit (APTC) by about $11 billion to $14 billion in 2027; the final rule and related analyses break projected savings and coverage impacts into multiple provisions with year‑by‑year effects [1] [6].
3. Alternative estimates and dissenting analyses
Several outside groups and stakeholders dispute the headline fraud totals and methods used to derive them. Hospital groups, health law advocates, and health policy analysts say the data and methodologies are insufficient to conclude that millions were victims of fraud, and that many “enrollees without claims” are simply healthy or have changing incomes — not proof of fraud [3] [7] [8]. Paragon and other critics argue the SEP and zero‑premium plans created incentives for misuse and offer higher estimates; defenders of current marketplace policy say those methods misclassify ordinary enrollment patterns as fraud [9] [3].
4. Projected coverage losses — the tradeoff highlighted by critics
CMS’s rulemaking documents and multiple policy analyses forecast significant coverage reductions tied to stricter verification: CMS and others estimate that between roughly 725,000 and 2 million people could lose Marketplace coverage in 2026 because of the rule changes and system adjustments, with several organizations flagging the higher end of that range as likely under some scenarios [5] [10] [11].
5. Administrative and state costs — hidden prices of enforcement
Beyond projected federal savings, CMS and independent analyses note implementation costs. CMS estimated state-based marketplaces (SBMs) and the federal government will incur millions in one‑time and ongoing costs to process verification documents and operate new policies (e.g., roughly $13–15 million to implement certain policies and process documents in 2025), which narrows net savings and creates operational burdens [12] [5].
6. Methodological disputes: what “improper enrollment” means
The debate centers on definitions and evidence. CMS ties “improper” enrollments to misleading broker activity, identity/income manipulation, and automated re‑enrollment into $0 plans; critics say counting enrollees without claims, or comparing current enrollment to older income surveys, overstates fraud because healthy people may not use care and incomes routinely change year to year [2] [3] [7].
7. Political and advocacy motives shaping the numbers
Advocacy and think‑tank reporting has driven much of the public debate: Paragon and aligned groups stress large waste/fraud narratives to justify policy rollbacks and subsidy expirations, while hospitals, consumer advocates, and KFF emphasize risks to access and question the evidence for massive fraud — showing partisan and institutional incentives shape which estimates are amplified [9] [3] [8] [7].
8. What is not settled in current reporting
Available sources do not mention a definitive, audited tally of confirmed criminal fraud cases that equals the headline millions — instead the numbers reported are estimates, model results, complaint tallies, and agency projections. Independent verification across federal and state enforcement actions and reconciled claims data remains limited in the public record cited here (not found in current reporting).
9. Bottom line for policymakers and the public
The record in CMS rulemaking shows large estimated fiscal exposure from improper enrollments and proposes rules expected to cut billions in APTC spending, but those same policies carry meaningful risks: substantial implementation costs, disputed methodologies behind the fraud totals, and projected coverage losses affecting hundreds of thousands to nearly two million people in 2026 [1] [5] [12]. Readers should weigh CMS’s fiscal projections against critiques of data and methods from KFF, hospital groups, and independent analysts [1] [8] [3].