The Centers for Medicare and Medicaid Services said on Tuesday it canceled roughly 315,000 Affordable Care Act marketplace enrollments covering about 760,000 people last month, alleging “rampant fraud” and improper enrollments in the program.
The enforcement action also involves verifying roughly 419,000 people to ensure they are legal U.S. residents and meet the income threshold requirements to receive benefits from the Affordable Care Act’s public exchanges, also known as Obamacare, according to a CMS release.
Vice President JD Vance’s White House Task Force to Eliminate Fraud led the cancellations, and estimates the action will save roughly $2.2 billion in taxpayer-funded subsidies. Speaking at a Tuesday briefing, Vance accused the Biden administration of maintaining a system that enabled fraud.
“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. What do you have? Of course, rampant, rampant fraud,” Vance said.
It is unclear how many of those 315,000 enrollments involved people who were not eligible to receive coverage, or whether the Biden administration hadn’t actually verified they could enroll. The action comes as the Trump administration has made widespread accusations of fraud in U.S. health programs and restricted funding and eligibility for the federal-state Medicaid program.
During the briefing Tuesday, CMS Administrator Dr. Mehmet Oz claimed around 35% of people currently in the Obamacare system “have never used the program.” He said those people never used a prescription or saw a doctor.
The law has an individual mandate, or requirement that most people buy insurance, in part because having healthier people who use less care in the patient pool makes the system more affordable.
Obamacare plans, created by President Barack Obama’s Affordable Care Act, offer subsidies based on household size and estimated yearly income. President Donald Trump failed to overturn the legislation during his first term, but has proposed modifications that would make those insurance plans less comprehensive.
Oz argued that bad actors were attracted to ACA marketplace subsidies during the Covid-19 pandemic, when federal spending surged dramatically. He pointed to enrollment growth from about 10 million people before COVID-19 to roughly 22 million afterward, arguing that weakened safeguards and a lack of enforcement by the Biden administration contributed to improper enrollments.
Obamacare plans experienced “unprecedented enrollment growth from 2021 to 2024,” according to a June report from the Assistant Secretary for Planning and Evaluation, the principal advisor to the Secretary of the Department of Health and Human Services on policy development. The report said, “nearly half of which was suspected to be improper, phantom, or fraudulent.” The report defined improper or fraudulent enrollment as individuals misstating their income to gain access to free plans.
The spike in enrollment came after the American Rescue Plan, a Covid response bill passed in 2021, enhanced available subsidies to make health care more affordable during the crisis. Those broader credits were extended but later expired at the end of 2025, raising premiums for many covered by Affordable Care Act exchanges.
An estimated 19.2 million Americans are currently enrolled in Obamacare plans, according to the report.
