Taxpayers Lost $65B to Obamacare Fraud in 2024; Feds Crack Down

Taxpayers lost an estimated $65 billion in 2024 due to improper enrollment in two major federal health insurance programs, the Affordable Care Act’s expanded Medicaid and Obamacare Marketplace, according to a report released by the Paragon Health Institute on August 26. The think tank found that 14.3 million enrollees either did not exist, did not qualify for benefits, or were duplicates—accounting for 34% of all Marketplace participants that year. The issue has intensified, with improper exchange enrollments rising by more than 26% in 2025 to an estimated 6.5 million.

Expanded Medicaid, a key component of the Affordable Care Act, allows states to cover individuals earning up to 138% of the federal poverty level—approximately $35,600 for a family of three in 2024. Obamacare, also known as the Health Insurance Marketplace, was accessible to those earning up to 400% of the federal poverty level, or about $103,000 for a family of three. Both programs are administered through the federal Marketplace, with coverage provided by private insurers.

Researchers estimate that over 9 million Medicaid expansion enrollees in 2024 likely did not meet eligibility requirements. In many cases, individuals exceeded income limits, failed to meet citizenship or residency requirements, or should have been enrolled in traditional Medicaid instead. For Obamacare, the availability of $0 premium policies during the post-COVID period created incentives for fraud, according to Brian Blase, president of Paragon Health Institute. Blase testified before Congress in December that some enrollees were added without their knowledge by fraudulent insurance brokers, resulting in federal premium payments to insurers and commission checks to brokers.

Investigations have also uncovered widespread use of fake identities. In 2024, government investigators successfully enrolled 20 nonexistent individuals in Obamacare using unassigned Social Security numbers and easily fabricated documents. As of September 2025, 18 of these fraudulent enrollments remained active, costing taxpayers over $10,000 per month. Additionally, the Government Accountability Office found 26,000 accounts that received subsidies in 2023 using Social Security numbers linked to deceased individuals, totaling $94 million in improper payments.

Federal agencies have responded with stricter enforcement. The Centers for Medicare and Medicaid Services (CMS) reported in January that it removed over 1 million enrollees who were improperly enrolled in both Obamacare and Medicaid or the Children’s Health Insurance Program (CHIP). Another 250,000 enrollees were removed after being added without consent. These actions are projected to save $10 billion annually.

Critics, however, argue that estimates of systemic fraud may be overstated. Covered California, the state’s health insurance marketplace, has stated there is no evidence of widespread fraud in state-based programs. Industry groups like America’s Health Insurance Plans have noted that a lack of claims activity does not necessarily indicate fraud, as some enrollees may simply remain healthy or have brief coverage periods. The Center on Budget and Policy Priorities has also pointed out that survey-reported incomes may not always reflect actual eligibility due to temporary fluctuations or data limitations.

Despite these challenges, federal officials continue to strengthen verification measures. Recent reforms include reinstating data matching between federal programs to prevent duplicate enrollment, requiring Medicaid recertification every six months, and suspending agents or brokers suspected of fraudulent activity.

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