Watchdog Finds Fraudulent Obamacare Signups And Republicans Cry Foul

A federal watchdog dropped what a top House Republican called “a bombshell” Wednesday, revealing how easy it is for fraudsters to extract Obamacare payments by setting up health insurance accounts for people who do not exist.

The Government Accountability Office, the nonpartisan investigative arm of Congress, said it had set up 24 fake accounts during the 2024 and 2025 plan years and that 22 had slipped through. The fake accounts in 2025 cost the government more than $10,000 per month in subsidies.

Republicans have long complained that a Democratic Congress’ move in 2021 to increase subsidies for health insurance bought on the Obamacare marketplace, and to make plans free for many low-income people, had allowed fraud to run rampant. Now they say the GAO report reaffirms their opposition to extending the enhanced subsidies expiring at the end of the month that have thrown Capitol Hill into turmoil.

The report is a “smoking gun that shows how this broken system, shielded by Democrat policies, has led to the federal government shoveling tens of billions of tax dollars to insurance companies through identity fraud,” said Jason Smith, the Missouri Republican who chairs the House Ways and Means Committee.

House Budget Chair Jodey Arrington (R-Texas), who called it a "bombshell," said the report showed “there is absolutely no justification for perpetuating these subsidies or the failed government-controlled Obamacare system Democrats are artificially popping up.”

The report comes as Republicans are debating how to handle the looming expiration of enhanced subsidies. While some vulnerable GOP lawmakers want to extend the subsidies, albeit with changes aimed at combatting fraud, many conservatives have opposed such a move. Beyond fraud, they say the enhanced subsidies are a giveaway to insurance companies and relatively well-to-do Americans. The 2021 law that created them extended subsidized insurance for the first time to people earning more than 400 percent of the poverty level.

If they expire, subsidies will return to the levels Democrats set when they created Obamacare in 2010.

Democrats extended the subsidies only through this year in order to keep costs down. The Congressional Budget Office says extending them for another 10 years will cost $350 billion.

Smith requested the GAO report alongside House Judiciary Chair Jim Jordan (R-Ohio) and House Energy and Commerce Chair Brett Guthrie (R-Ky.).

The watchdog had four people attempt to sign up for coverage for plan year 2024. It found that all four of the applicants were able to get subsidies to pay down insurance costs even though they did not submit any information on citizenship, income or other needed requirements.

While the Obamacare marketplace requested the information for some of the applicants, GAO did not submit any documentation. The watchdog said all of the fake applicants were still able to get coverage.

GAO pulled the same ruse with 20 applicants for plan year 2025. The marketplace approved coverage for 19 of the 20. It later cancelled coverage for one applicant after GAO didn’t provide requested citizenship documentation. However, as of September 2025, all 18 of the other fictitious enrollees still had accounts.

GAO also found problems with multiple people enrolling with the same Social Security number. The government agency that oversees Obamacare, the Centers for Medicare and Medicaid Services, doesn’t prohibit new enrollments that use an already enrolled Social Security number. The reason that's allowed is to ensure the actual holder of the number can get coverage in cases of identity theft or a data entry error, GAO’s report said.

However, the GAO found extensive overuse of Social Security numbers.

For instance, one number was used for more than 125 insurance plans in 2023.

Some GOP lawmakers argue unscrupulous brokers are able to enroll Americans without their knowledge. The customer doesn’t know because they qualify for zero-dollar premiums. Other complaints have increased in recent years of Americans getting switched from one plan to another without their consent.

CMS did not immediately return POLITICO's request for comment. The agency has taken steps to address broker fraud. In 2024, it implemented changes to commissions for agents and brokers to remove incentives for fraud. CMS also suspended 850 agents and brokers from June 2024 through October 2024 on suspicion of fraud.

A top Democrat, Ways and Means Health Subcommittee ranking member Lloyd Doggett said the report showed how the Trump administration had bungled oversight of the program because it had reinstated the suspended brokers.

“Yelling ‘fraud’ while empowering fraudsters only shows the total hypocrisy of the Trump regime and its congressional enablers,” Doggett said in a statement.

The Senate is set to vote on a subsidy extension next week, but no bipartisan deal has emerged.