CMS Cancels Fraudulent Obamacare Coverage for More Than 750,000 People

The Centers for Medicare & Medicaid Services (CMS) has canceled roughly 315,000 unauthorized Obamacare enrollments covering more than 760,000 people, with approximately $2.2 billion in taxpayer-funded premium subsidies expected to be returned.

The size of the recovery is notable, but so is the process CMS used before canceling the enrollments. The agency worked with insurers to identify accounts showing multiple signs of unauthorized enrollment and provided opportunities for consumers to confirm their coverage before it was terminated.

CMS Set a High Bar for Canceling Coverage

Health policy expert Brian Blase detailed the safeguards used to separate potentially unauthorized enrollments from legitimate coverage.

According to Blase, an enrollment had to meet four criteria before moving through the cancellation process. The application had to be submitted by an agent or broker without a Social Security number or immigration number, there could be no record of the enrollee contacting the insurer, the enrollee had to be paying $0 toward the premium because federal subsidies covered the full cost, and there could be no medical claims associated with the coverage.

Meeting those criteria alone did not result in cancellation. Insurers sent two notices and gave affected enrollees 30 days to respond. If there was no response, CMS determined the enrollment was unauthorized and canceled the coverage.

CMS also established a process for legitimate consumers who may have been affected. Blase noted that an enrollee can contact the Marketplace call center, provide a verified Social Security number and have coverage reinstated.

These safeguards provide important context for the 315,000 cancellations. The enrollments were not removed based on a single discrepancy. Multiple warning signs had to be present, followed by attempts to contact the enrollee before coverage was canceled.

Unauthorized Enrollment Has Been a Growing Problem

The enforcement action follows years of warnings about weaknesses in the Obamacare Marketplace.

The Government Accountability Office (GAO) found that consumer complaints associated with confirmed unauthorized enrollments and plan switches increased more than fourfold from 2023 through 2025. GAO had previously identified at least 160,000 federal Marketplace applications in 2024 with likely unauthorized changes by agents or brokers.

Separate GAO work has identified weaknesses in controls surrounding the advance premium tax credit. Through undercover testing, GAO was able to obtain subsidized coverage for fictitious applicants, including some who failed to provide requested documentation. GAO noted that its undercover results cannot be projected across the entire Marketplace, but concluded that vulnerabilities in the subsidy program remained.

Those weaknesses carry substantial consequences for taxpayers. Federal premium subsidies send billions of dollars each year to insurers on behalf of Obamacare enrollees. If an enrollment is unauthorized, taxpayer subsidies can continue flowing even when the supposed enrollee has no contact with the insurer and never uses the coverage.

CMS Is Strengthening Marketplace Safeguards

CMS has paired the cancellations with additional enforcement and verification measures.

The agency has moved against agents and brokers accused of failing to comply with Marketplace requirements and is strengthening identity verification for people handling enrollments. CMS is requiring verifiable Social Security numbers or immigration document numbers on agent-assisted applications and moving toward electronic consumer authorization before an agent or broker can make changes to an application or enrollment.

Those changes address weaknesses that allowed unauthorized enrollments to occur in the first place. Stronger verification should make it more difficult to enroll consumers without their knowledge while preserving access for people legitimately seeking subsidized coverage.

CFE Takeaway

The cancellation of 315,000 unauthorized Obamacare enrollments shows the importance of stronger oversight of federal health insurance subsidies. CMS used multiple indicators, repeated notices and a reinstatement process to protect legitimate consumers while identifying enrollments that could not be verified.

With roughly $2.2 billion in taxpayer-funded subsidies expected to be returned, the financial stakes are substantial. CMS should continue strengthening enrollment verification, enforcing rules for agents and brokers, and recovering federal subsidies associated with unauthorized coverage.