Source: Bloomberg Law
- Republicans suspect fraud in marketplace subsidies
- Proposal could be Trump team’s first significant health rule
The Trump administration is moving to issue a proposed rule that would address “program integrity” concerns in the individual health insurance marketplace created by the Affordable Care Act.
The proposed rule (RIN: 0938-AV61) from the Centers for Medicare & Medicaid Services went to the White House Office of Management and Budget for review on Tuesday, marking what could be the first significant health-care proposal of the second Trump administration.
The CMS didn’t immediately respond to a request for additional information on its proposal.
A record 24.2 million people signed up for marketplace health insurance through HealthCare.gov and state marketplaces during the 2025 open enrollment period. That included 3.9 million new enrollees.
But Republicans in Congress and conservative policy watchers say the numbers could reflect possible fraud in the improper use of advance premium tax credits offered under the Democrats’ Inflation Reduction Act that help pay for coverage.
The IRA tax credits are slated to expire at the end of 2025 unless funding is renewed by Congress. Republicans, who control Congress and the White House, have strongly opposed the ACA and renewing funding for the tax credits.
Questions Over Subsidies
In June 2024, the Paragon Institute, a conservative think tank, issued a report that claimed that 5 million marketplace enrollees receive an estimated $20 billion in health insurance subsidies that they aren’t entitled to based on their actual income.
That prompted House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.), House Ways and Means Committee Chair Jason Smith (R-Mo.), and House Judiciary Committee Chair Jim Jordan (R-Ohio) in July 2024 to ask the Health and Human Services Office of Inspector General and the Government Accountability Office for “systemic reviews of Obamacare enrollment to determine the breadth of improper enrollment and its underlying causes,” a joint press release from the committee chairs said.
In November 2024, the GAO issued a report that recommended the CMS conduct a risk assessment to see if additional oversight is needed to ensure that advance premium tax credits were not being used improperly by states to cover the cost of non-mandated benefits.
Marketplace plans must cover a set of “essential health benefits.” States can require that they cover additional benefits, but the tax credits can’t be used to subsidize their costs.
The American Rescue Plan Act of 2021 increased the premium subsidies and expanded their eligibility to people earning above 400% of the federal poverty level for 2021 and 2022. The IRA continued those expanded subsidies through 2025.
Agent, Broker Activity
Fraud and abuse concerns have also been raised about agents and brokers who help consumers enroll in marketplace coverage.
A rule finalized in the last days of the Biden administration tightened protections against unauthorized activity by agents and brokers.
The 2026 Benefit and Payment Parameters rule (RIN 0938-AV41), effective Jan. 15, expanded CMS’ authority to suspend an agent or broker’s ability to work with the marketplace if circumstances are found that pose an unacceptable risk to the accuracy of marketplace eligibility determinations, operations, applicants, and or enrollees.
A 2024 directive from the CMS also banned agents and brokers from making changes to a consumer’s HealthCare.gov enrollment unless they’re already associated with that particular signup.
