GOP talking point: The ACA is haunted by "ghost" enrollees, but the devil is in the data

Victoria Knight

The idea that the Affordable Care Act’s marketplaces are rife with fraud has become a major point of discussion among Republicans, as lawmakers in Congress debate whether to extend enhanced tax credits that help offset the cost of healthcare marketplace coverage for low- and middle-income people. Those ACA subsidies expire at the end of the year and have become a bright spot in the government funding showdown.

“Tax credits go to some very well-deserved people. We believe that tax credits actually go to a lot of waste and fraud in the insurance industry,” Vice President J.D. Vance said during a news conference. The last interview On CBS News. “We want to make sure the tax credits go to the people who need them.”

The key to the Republican argument about widespread fraud is A Report published in August By the Paragon Health Institute, a Republican-aligned think tank. The report focuses on “ghost enrollees” in the ACA marketplaces.

These “phantom enrollees,” who don’t use any Medicare in a year, exceed percentages “of what you would expect in a normal, functioning health insurance market,” Paragon President Brian Blase said.

Blase and his team say they have determined the percentage of claim-free enrollees in the ACA market by analyzing the Centers for Medicare and Medicaid Services Data released in August.

This highlights one of the central problems with CMS data: it tracks the number of plan enrollments rather than the number of individual enrollees.

Federal data analyzed by Paragon could double-count enrollees if they change plans during the year, said Cynthia Cox, vice president and ACA program director at KFF, a health information nonprofit that includes KFF Health News.

According to this data, in 2021, the percentage of registration without any medical claims reached 19%. This percentage jumped to 35% in 2024.

For Belize and Paragon, this increase in no-claims filings is evidence of fraud. They say that suggests fraudulent insurance brokers are enrolling people who don’t exist, don’t qualify, or have other insurance and don’t need ACA coverage.

“Basically, what happened was that the insurance companies benefited, the brokers benefited financially, and huge numbers of people were enrolled in the program,” Blaise said. This is where these ghosts come into play. “They have no idea that they are registered and therefore, they do not use any medical care.”

In 2021, former President Joe Biden signed the American Rescue Plan Act, which included Enhance ACA subsidies That made plans available at low or no cost to some low-income individuals and expanded subsidy eligibility for some middle-income people. These credits were extended until 2025 as part of the Inflation Reduction Act, signed in 2022.

News stories Show how simple it is It may be possible for insurance brokers in some states to sign people up for ACA insurance plans at no cost, without consumers’ knowledge. Department of Health and Human Services He tried to Eliminate on these fraudulent practices.

But health policy experts and analysts cautioned against reading too deeply into the numbers of registrants who have no claims.

“It’s not that he’s wrong, but I think he’s over-interpreting it,” Michael Cannon, director of health policy studies at the libertarian Cato Institute, said of Blase’s analysis.

There is evidence of increased plan switching, partly due to extended open enrollment periods, Cox said. Increased plan switching could increase the number of people being double-counted in federal data and increase the percentage of enrollees who have no claims over the years. Some enrollees may also have been in the ACA plan for only part of the year, making them less likely to file a claim.

“We’re not trying to say there’s no fraud. It’s real. But the question is, how big is this problem?” Cox said. “Just suggesting that anyone who doesn’t use health care is a fraudulent enrollee — that’s not true. Too many people don’t use health care.”

It’s not uncommon for healthy people in the insurance market to not use their insurance in a given year, according to health policy experts. With the strengthening of support for the Anti-Corruption Authority, more people have signed up to cover the market. Registration data shows that it was made The market population is youngerand younger enrollees may be less likely to use their insurance. A Latest report It found that each year from 2018 to 2022, an average of 23% of enrollees in employer-sponsored plans did not use their health insurance.

“The idea that people aren’t using health insurance is somewhat problematic — it might be. But it’s not in principle,” said Joseph Antos, a health policy expert and honorary fellow at the right-leaning American Enterprise Institute. “The point is that for insurance to work, you need some people who aren’t making claims on insurance.”

The major trade associations for insurers and hospitals, AHIP and the American Hospital Association, also objected to Paragon’s characterization of the federal data, and even published Blog posts collapse Their arguments. AHIP pushed back on the idea that the insurance industry benefits from enhanced subsidies by pointing out that current law sets limits on health plans’ profits.

Blase started Paragon in 2021 and has become widely influential in Republican health policy circles. The organization’s alumni are employees of the Trump administration and House Speaker Mike Johnson’s office, so the group’s ideas will become talking points for Republicans.

It’s also not new for the GOP to say government programs are full of fraud. During negotiations on the big beautiful bill, Republican lawmakers insisted that Medicaid would not be cut to cover the costs of tax cuts, but that “waste, fraud and abuse” in the health program would be eliminated.

Now, the ACA is taking center stage in the ongoing federal government shutdown, as Democrats press Congress to extend existing ACA subsidies, which are set to expire at the end of the year. Fraud, once again, is at the center of the Republicans’ argument. Democrats take a different view on the extent of fraud in the program, emphasizing instead that the expiration of the subsidy will lead to increased insurance premiums.

“It’s become unhelpful. It’s a subsidy for insurance companies,” Speaker Johnson said of the ACA subsidies at a meeting. Press conference to close Last week. “When you subsidize the health care system and pay insurance companies more, prices go up. That’s the problem.”

KFF Health News senior correspondent Julie Appleby contributed to this report.

KFF Health News It is a national newsroom that produces in-depth journalism on health issues and is one of the core operating programs of KFF – an independent source for health policy research, polling and journalism. Learn more about KFF.