The debate over the Affordable Care Act's enhanced premium subsidies continues, with Republicans arguing that fraud in the health insurance marketplace is rampant and a reason to withhold the tax break. Senate Majority Leader John Thune, a Republican from South Dakota, cited a December 3 report from the U.S. Government Accountability Office (GAO) on fraud tied to ACA subsidies. However, some health policy experts disagree, suggesting that the fraud is not as severe as lawmakers claim and that improving security measures is a better approach than cutting subsidies. Michael Gusmano, a professor of health policy at Lehigh University, points out that the scope of fraud is trivial and that it's being used as a scare tactic to justify reducing the federal government's role in subsidizing health insurance. He highlights a GAO finding that in 2023, over 58,000 Social Security numbers of deceased people received premium subsidies, but this only amounted to 0.4% of all Social Security numbers that received a premium tax credit that year. This suggests that the fraud is not as widespread as Republicans claim. Despite this, Republicans continue to argue that ACA fraud is an impediment to a competitive marketplace. The GAO report outlines various channels of fraud involving ACA subsidies available through the federal marketplace, which is used by about 30 states. The rest operate their own marketplaces. The report comes as President Donald Trump and Republicans have recently lashed out over fraud in other benefit programs, such as social safety net programs in Minnesota, where many of the alleged perpetrators are Somalis. Republicans have also tried to dismantle the ACA since its early days, with a multibillion-dollar GOP package of tax cuts known as the 'big beautiful bill' expected to result in the loss of coverage for over 3 million people over the next decade. The GAO report's findings suggest 'enrollment control weaknesses,' but these cannot be generalized to the universe of ACA enrollees and are consistent with results from similar testing conducted in 2014-2016. The subsidies have been available since 2014 and were enhanced in 2021. Experts argue that the negative financial consequences for households and impacts on public health of not extending the subsidies far outweigh the losses from fraud. The average subsidy recipient would see their out-of-pocket premium payments increase significantly if enhanced subsidies disappear, and many households would lose assistance altogether. Nick Fabrizio, a health policy expert, suggests that the U.S. should extend the subsidies for 2026, but with reforms to throttle back the scope of fraud in the federal marketplace and to control costs in the broader healthcare system. He emphasizes the need to stabilize the system and meet in the middle. The GAO report notes that fraud risks are likely to increase as the ACA subsidies grow, and the Centers for Medicare & Medicaid Services hasn't updated its fraud risk assessment since 2018. This growth may warrant additional fraud controls, and experts agree that the government should tweak some parameters of the ACA subsidy system to reduce fraud and corruption.
