Fiscal conservatives are poised to leverage a recent bombshell report on widespread fraud within the Obamacare program as a tool to thwart a temporary extension of enhanced premium subsidies, which are set to expire at the end of the year.
GOP members who do not wish to extend the temporarily added subsidies for Obamacare plans will likely point to a new report from the Government Accountability Office, published earlier this month, that found potentially tens of billions of dollars in fraud and mismanagement of Obamacare subsidies.
The GOP has been divided for weeks over whether to compromise with Democrats on extending the Obamacare enhanced premium tax credits, which were passed by former President Joe Biden as part of a COVID-19 relief measure. Without the premium credits, average out-of-pocket insurance costs for enrollees on the Obamacare exchanges are set to double next year, with small business owners and early retirees too young for Medicare being the hardest hit.
Senate Democrats are pushing for a show vote, expected on Thursday, for a “clean” three-year extension of the subsidies, meaning that the bill does not include structural changes to the program, to avoid the insurance affordability cliff for the nearly 24 million enrollees.
However, Republicans and right-leaning health economists have argued for months that the premium tax credits, which are paid to insurance companies to offset patient costs, are ripe for waste, fraud, and abuse.
This month’s new GAO audit of the Obamacare program outlined how the agency obtained subsidized plans for 23 out of 24 fictitious applications using fake Social Security numbers, amounting to a more than 90% failure rate in existing fraud detection systems.
Four of the fake accounts established for plan year 2024 were each paid $2,350 per month for subsidized Obamacare insurance, totaling roughly $113,000 for all four for the year. The GAO did not provide cost estimates for the 18 other fake accounts that were paid in 2025, since the year is not yet over.
The watchdog agency’s audit also uncovered roughly $94 million in tax credits paid to officially deceased enrollees as well as nearly $27 billion in improper payments.
Conservatives have long maintained that the zero-premium plans for those under 150% of the federal poverty line created by the COVID-19-era subsidies have enabled dubious insurance brokers to enroll potentially millions of people without their knowledge.
The Trump-aligned Paragon Health Institute reported this summer that an estimated 6.4 million people were enrolled in fully subsidized plans and did not use their insurance, signaling that they could be “phantom enrollees.”
The Centers for Medicare and Medicaid Services this summer similarly found that 1.6 million Americans were fraudulently enrolled in both subsidized Obamacare and state-run Medicaid programs.
Brittany Madni of the right-leaning fiscal policy group EPIC told the Washington Examiner that conservatives have long pointed to Obamacare’s subsidy structure as a driver of fraud, but now the GAO report provides a “straightforward” reason not to extend the enhanced subsidies.
“Here we have a GAO report demonstrating that not only are the subsidies underlying the fraud issue, but that the EPTCs, COVID credits, they’re making it way, way worse,” Madni said.
Senate Majority Leader John Thune (R-SD) called the report “damning” during a floor speech on Monday and said the Democrat-proposed clean extension of the subsidies would prop up a failed system.
“We have spiraling healthcare costs, a program incredibly vulnerable, as is this evidence of, vulnerable to fraud and abuse,” he said. “And again, Democrats are proposing that we do absolutely nothing. No reforms, no additions, no safeguards, just billions more in taxpayer dollars.”
Two of the three GOP counterproposals put forward this week by a handful of Senate Republicans also offered a short-term extension of the enhanced subsidies.
Sen. Roger Marshall (R-KS) posted on X on Monday that his proposal, which offers a one-year subsidy extension, will include some form of “fraud protection.” The Washington Examiner contacted Marshall’s office for more details.
The plan put forward by Sens. Susan Collins (R-ME) and Bernie Moreno (R-OH) would extend the subsidies for two years with decreasing income limits over time. The bill would also eliminate zero-premium plans by requiring at least $25 monthly payment, aimed at curbing the incentive for fraudsters to enroll patients without their knowledge.
Sens. Bill Cassidy (R-LA) and Mike Crapo (R-ID) also reportedly are circulating a plan that would not extend the premium tax credits but instead transfer the funds directly into health savings accounts controlled by patients.
Several House Republicans have voiced concerns about the GAO report’s findings, but have stopped short of making the connection between the newfound fraud and the impending vote to extend the subsidies.
House Energy and Commerce Chairman Brett Guthrie (R-KY) said in a statement to Breitbart last week that the GAO’s findings “further confirm that Republican efforts to strengthen, secure, and sustain our federal health programs are critical and necessary to ensure access to quality health care at prices Americans can afford.”
Rep. Jason Smith (R-MO), chairman of the Ways and Means Committee, said the report is the “smoking gun” that proves the government is “shoveling tens of billions of tax dollars to insurance companies through identity fraud.”
SENATE DEMOCRATS SETTLE ON THREE-YEAR OBAMACARE SUBSIDY BILL, DRAWING GOP JEERS
House Budget Committee Chairman Jodey Arrington (R-TX) last week blamed Democrats for the “fraud-ridden subsidies.”
“There is absolutely no justification for perpetuating these subsidies or the failed government-controlled Obamacare system Democrats are artificially propping up,” he said.
