Obamacare Enrollment Is Falling — Paragon Says 6.2M Sign‑Ups May Be Improper

“Declining enrollment is not necessarily evidence of a failing insurance market,” says health policy analyst Sally Pipes. “It may instead reflect a long‑overdue correction to enrollment figures that have become inflated by fraud, abuse, and weak eligibility verification.”

Enrollment on the Obamacare marketplaces has fallen for the first time in years. The exchanges first opened on January 1, 2014, following the passage of the Affordable Care Act in 2010.

Recent projections from KFF suggest marketplace enrollment could shrink by roughly 5 million people after the expiration of enhanced pandemic‑era premium subsidies. Many observers interpret that decline as evidence that fewer Americans will be able to obtain affordable coverage. But a new analysis from the Paragon Health Institute offers a different explanation: a sizable portion of recent exchange enrollment may never have been legitimate.

Paragon’s Findings

Paragon estimates about 6.2 million marketplace enrollees this year may be improperly enrolled. The report says some enrollees do not qualify for the subsidies they received, while others appear to have been signed up without their knowledge. If accurate, that distortion could represent more than one‑quarter of total exchange enrollment and expose taxpayers to as much as $25 billion in federal subsidy costs.

Florida: A Case Study

Florida is a striking example. Paragon reports more than 3 million exchange enrollees in the state this year claimed incomes between 100% and 150% of the federal poverty level (roughly $15,960 to $23,940 for an individual). Yet Paragon estimates only about 636,000 Floridians plausibly had incomes within that range—an inconsistency that suggests widespread income misreporting or other improper enrollment activity.

Other Signals of Trouble

The report’s conclusions align with other indicators of systemic problems inside the exchanges. In 2024, the Centers for Medicare & Medicaid Services (CMS) reported roughly 50,000 complaints of unauthorized marketplace enrollments or plan switches in the first quarter alone, and temporarily suspended about 200 agents and brokers pending investigations.

Paragon also identified that 12 million exchange enrollees in 2024 generated no insurance claims that year. While some enrollees may simply have remained healthy, the large size of that claimless population raises questions about unauthorized or otherwise improper enrollments—especially given that brokers and enrollment firms can collect commissions and trigger subsidy payments even if enrollees never use care or do not realize they have been enrolled.

What This Means

KFF projects average monthly marketplace enrollment could decline from about 22.3 million to roughly 17.5 million after enhanced premium subsidies ended. Some of that decline will reflect consumers who find coverage less affordable. Paragon’s analysis suggests, however, that part of the drop may reflect an unraveling of previously inflated enrollment totals caused by fraud, abusive practices, and weak eligibility verification.

Before policymakers and advocates interpret falling enrollment solely as a sign of reduced access, they should first confirm that counted enrollees actually qualify for coverage and knowingly opted in. Strengthening identity and income verification, tightening oversight of brokers and enrollment firms, and auditing subsidy payments would help ensure enrollment figures reflect real, intended coverage.

Originally published on Forbes.com.