Conservative health economists suspect that program integrity problems are the main reason why Obamacare enrollment for the 2026 plan year has remained relatively the same despite rising premiums and expiring subsidies.
Federal Obamacare marketplace insurance enrollment reached 15.6 million in December, according to the Centers for Medicare & Medicaid Services, down roughly 4% from the same time last year.
Experts have been concerned for months that the expiration of COVID-19-era enhanced premium subsidies on Jan. 1 would cause patients to be unable to afford insurance or fall off the so-called “subsidy cliff.”
Enrollees losing COVID-19-era subsidies will see their premium contributions more than double on average, with higher-income enrollees facing the steepest increases. Gross premium costs, or the total price of an insurance plan unaffected by subsidies, have also increased by 26% for 2026.
Brian Blase, president of the free-market think-tank Paragon Health Institute, published a report on Tuesday outlining why he suspects that heavily subsidized Obamacare zero-dollar premium plans, coupled with automatic reenrollment, create a perfect storm for fraud, keeping enrollment artificially high.
“In a normal market, soaring prices should lead to lower demand and fewer purchases, as consumers explore alternatives,” Blase wrote. “But [Obamacare] is not a normal market because of the government’s massive role and taxpayer subsidies.”
Paragon estimated that in 2024, there were between 3 and 4 million phantom Obamacare enrollees, who are either unaware of their insurance coverage or entirely fictitious.
This is possible because of the plethora of zero-premium insurance plans, which Blase said creates a scenario in which “individuals receive no price signal and no reason to investigate their coverage status.”
Blase argued that automatic reenrollment in Obamacare plans exacerbates the phantom enrollee problem. In 2025, roughly 45% of exchange enrollees took no action to be reenrolled in the program, not needing to confirm income, residency, or other eligibility criteria, leaving no room to catch improper enrollment.
“Once created, these enrollments are unlikely to unwind on their own, because zero-premium plans eliminate the friction that would otherwise prompt enrollees—or insurers—to disengage,” Blase wrote.
CMS Administrator Dr. Mehmet Oz posted on X earlier this month that the small noticeable dip in enrollment from 16 million last year to 15.6 million this year is attributable to “several important CMS actions over the past year to combat fraudulent and improper enrollments.”
Oz’s agency announced in July that nearly 3 million people were either enrolled in both Medicaid and Obamacare insurance programs or were enrolled in the Medicaid systems of multiple states.
And in December, the Government Accountability Office published a report finding possibly tens of billions of dollars in fraud and mismanagement of Obamacare subsidies, largely due to the program’s inability to identify fraudulent enrollment.
The GOP budget reconciliation bill passed this summer, the One Big Beautiful Bill Act, takes measures to curb improper Obamacare enrollment by requiring household income verification and immigration status, but these new program requirements will not take effect until plan year 2028.
But the One Big Big Beautiful Act did not address the issue of zero-dollar premiums, which Blase said ought to be a priority for Congress in the new year.
“Policymakers should require that all enrollees pay at least a nominal premium, ensuring that enrollment reflects an affirmative choice and that ineligible or fictitious enrollments naturally unwind,” Blase wrote.
TRUMP’S HEALTHCARE AGENDA KICKS INTO GEAR IN 2026
Congressional Republicans have largely been insistent that any extension of the COVID-19-era subsidies or other structural changes to Obamacare would require enrollees to pay at least some premium contribution to avoid the problem of phantom enrollment.
Republicans and Democrats were not able to reach a deal on what to do about the expiring subsidies before the end of the year, and the matter will likely be taken up again in January 2026.
