GAO: ‘Fictitious’ Applicants And Deceased People Easily Approved For Federal ACA Health Subsidies
Federal investigators successfully enrolled fictional characters in government-subsidized health insurance plans and identified millions of dollars in subsidies linked to deceased individuals, according to a scathing new audit released Wednesday.
The Government Accountability Office (GAO) report details significant vulnerabilities in the Advance Premium Tax Credit (APTC) program, a financial pillar of the Affordable Care Act designed to help low-to-moderate-income families afford health insurance.
Despite previous warnings, the congressional watchdog found that fraud controls remain porous, allowing bad actors to exploit the system with relative ease.
A Successful Sting Operation
In a covert test of the federal Marketplace’s defenses, GAO investigators created 20 fictitious identities for the 2025 plan year. The results were stark: the government approved subsidized coverage for 18 of the 20 fake applicants.
Investigators used invalid Social Security numbers (SSNs) and, in some cases, submitted counterfeit documents. Even when the system flagged issues, the applications were often pushed through. In tests conducted late in 2024, all four fictitious profiles submitted were approved for coverage, costing taxpayers roughly $2,350 per month in subsidies for people who do not exist.
“The results of our covert testing… suggest weaknesses in enrollment controls—such as identity proofing and income verification—in the federal Marketplace,” the report stated.
Dead People and Duplicate Identities
Beyond the sting operation, the audit analyzed data from the 2023 and 2024 plan years, uncovering widespread irregularities in how taxpayer money is distributed.
Investigators found that in 2023 alone, the Centers for Medicare & Medicaid Services (CMS) paid over $94 million in subsidies for households that included a deceased individual. In one specific analysis, over 7,000 SSNs were linked to people whose reported death date occurred before their insurance coverage even began.
Perhaps more alarming was the rampant reuse of Social Security numbers. The audit identified nearly 30,000 SSNs that were used to claim more than a year’s worth of coverage in a single year, a mathematical impossibility suggesting identity theft or “synthetic identity fraud.” In the most egregious example cited, a single SSN was used to secure over 125 different insurance policies, racking up more than 71 years’ worth of subsidized coverage in a 12-month period.
Rogue Brokers and “Plan Switching”
The report also validates growing consumer complaints regarding aggressive and unauthorized tactics by insurance agents and brokers. Because these intermediaries earn commissions from insurance issuers rather than the government, there is a financial incentive to maximize enrollments.
The GAO identified at least 160,000 applications in plan year 2024 that underwent “likely unauthorized” changes. This often involves brokers switching a consumer’s health plan without their consent to generate a new commission—a practice that can leave patients unexpectedly unable to see their doctors or fill prescriptions.
While CMS has recently implemented a requirement for three-way calls to authorize agent changes, investigators noted that loopholes remain. Rogue agents can simply submit entirely new applications to circumvent the safeguard.
Oversight Lagging Behind
The root of the problem, according to the GAO, is a failure to adapt. CMS has not updated its fraud risk assessment for the APTC program since 2018, despite the program ballooning in size. Annual subsidy outlays have more than doubled from $53 billion in 2018 to nearly $124 billion in 2024.
“Leading practices in fraud risk management call for planning regular fraud risk assessments,” the report noted, adding that CMS’s outdated strategy fails to account for new threats like the rise of Enhanced Direct Enrollment (EDE) platforms.
CMS officials told auditors they plan to update their risk assessment by the end of 2025. However, until systemic loopholes are closed, the federal government likely continues to pay monthly premiums for thousands of enrollees who are either deceased or entirely imaginary.
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