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US Cancels 315,000 Obamacare Plans, Citing Fraud

11 hours ago

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CMS scrapped about 315,000 ACA marketplace enrollments covering 760,000 people, a move officials say will save $2.2 billion in subsidies.

The Centers for Medicare and Medicaid Services said on Tuesday it had scrapped about 315,000 Affordable Care Act marketplace enrollments last month, plans that covered roughly 760,000 people, after concluding the sign-ups were not authorized. Vice President JD Vance described the problem as "rampant fraud."

The agency said its action was driven by the White House Task Force to Eliminate Fraud, which Vance leads. The task force put the expected savings at around $2.2 billion in subsidies paid for by taxpayers. Alongside the cancellations, CMS said it is checking roughly 419,000 more enrollees to confirm they live in the United States legally and fall within the income limits needed to qualify for coverage on the public exchanges.

Speaking at a briefing on Tuesday, Vance placed the blame on the previous administration, arguing that its rules let improper claims flow through unchecked. "You have a system where, on the one hand, brokers are paid money to feed patients into the system, while on the other hand, the government isn't even checking whether the people enrolled are actually eligible for the program," he said. "What do you have? Of course, rampant, rampant fraud."

How many of the 315,000 canceled enrollments belonged to people who were never eligible remains unknown. It is also unclear whether the earlier administration had failed to confirm their eligibility before the coverage took effect.

The move fits a broader pattern under President Donald Trump, whose administration has repeatedly alleged fraud across federal health programs and has tightened both funding and eligibility for Medicaid, the health plan jointly run by Washington and the states.

CMS Administrator Dr. Mehmet Oz used the same briefing to argue that a large share of the marketplace population is not using its coverage. He said close to 35% of current enrollees have never filled a prescription or visited a doctor through the program. Under the ACA, most people are required to carry insurance, a rule meant partly to keep healthier, lower-cost members in the risk pool so premiums stay manageable. That requirement has lost its bite, however, because the federal fine for going uninsured has stood at zero dollars since 2019.

The marketplace plans grew out of the Affordable Care Act signed by President Barack Obama, and they hand out subsidies scaled to a household's size and its expected annual earnings. Trump tried and failed to repeal the law during his first term. He has since floated changes that would trim the range of benefits the plans must cover.

Oz tied the alleged abuse to the pandemic years, when federal outlays climbed sharply. He said the extra money drew bad actors into the system and pointed to the rise in sign-ups, from about 10 million before Covid-19 to roughly 22 million afterward. Weak controls and lax enforcement under the prior administration, he argued, allowed many of those enrollments to slip through improperly.

What the June report found

A report issued in June by the Office of the Assistant Secretary for Planning and Evaluation, the top policy adviser to the head of the Department of Health and Human Services, described "unprecedented enrollment growth from 2021 to 2024" in the marketplace plans. The report said that "nearly half" of that growth "was suspected to be improper, phantom, or fraudulent." It described improper or fraudulent sign-ups as cases in which people understated their income to unlock plans that cost them nothing.

That surge followed the American Rescue Plan, the 2021 Covid-19 relief law that boosted the subsidies available to buyers as a way to hold down costs during the emergency. Lawmakers later extended the enlarged credits, but those enhancements ran out at the close of 2025, pushing premiums higher for many people who buy coverage on the exchanges.

According to the same report, an estimated 19.2 million Americans are signed up for the plans today.

Obamacare, Affordable Care Act, CMS, JD Vance, Mehmet Oz, healthcare fraud, ACA enrollment, Trump administration

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