Improper and Phantom Enrollment in ACA Exchange Plans, 2019-2026 2019 baseline
Other factors driving enrollment
was different. If a person with a major pre-
existing condition applied for individual coverage, the insur- er could take one of four steps: accept the applicant, charge a higher premium, put a rider on the policy so the insurer didn’t have to pay for medical costs related to that medical condi- tion, or decline coverage. This wasn’t because health insurers are mean or greedy, as Demo- crats asserted. It was because many people
10.4M 10.4M 10.6M 10.4M 0.2M 0.4M 11.1M 0.3M 10.4M
13.8M 2.2M
1.1M 15.4M
2.3M 2.6M
20.1M 4.8M
4.8M Improper or phantom enrollments 22.1M 5.6M 19.2M 6.1M
6.1M 2.6M
10.4M
10.4M
10.4M
10.4M
10.4M
2019 SOURCE:
cms.gov
would have remained uninsured until they were diagnosed with a seri- ous medical condition. There wouldn’t be a large number
of healthy people paying the premi- ums, so the individual market would be very small and very expensive. It would be as if drivers remained uninsured until they had an accident and then bought coverage. It would be very expensive because the only ones buying it would be people who had just had an accident. Barack Obama and Democrats
wanted insurers selling Obamacare coverage to accept anyone who applied regardless of major preexist- ing conditions, known as guaranteed issue. But they wanted to prevent people
from waiting until they needed care to buy it, so they imposed an indi- vidual mandate, meaning everyone was required to have coverage or they would have to pay a penalty. But it was easy for the uninsured to
game the system and the mandate was never effective. Republicans reduced the penalty for being uninsured to zero in the Tax Cuts and Jobs Act of 2017.
‘DEATH SPIRAL’ Those of us engaged in the Obamacare debate warned Democrats that impos- ing guaranteed issue would lead to a health insurance “death spiral.” That’s when people with major
medical conditions are allowed to join the health insurance pool, driv-
ing up health premiums. Younger and healthier people
would decide the coverage isn’t worth the price and drop it — secure in the knowledge that they could get it if they ever needed it. The insurance pool would get
smaller and sicker, which means even more young and healthy people would drop out. Before long, only the sickest people
are in the pool and the premiums are prohibitive. That’s what’s happening to Obamacare. One estimate predicts Obamacare Marketplace enrollment will drop by 17% to 26% this year as enrollees con- clude the increased premiums aren’t worth it.
SUBSIDIES MASK INCREASES One reason more people haven’t aban- doned Obamacare is because taxpay- ers provide very generous subsidies. About 90% of enrollees take advan-
tage of these subsidies. While they make coverage more affordable, they also mask the rise in premiums. In addition, President Joe Biden
and Democrats passed enhanced Obamacare subsidies in 2021. This meant millions of people had their premiums completely paid for by taxpayers.
FRAUD CRACKDOWN The federal government under Presi- dent Donald Trump is trying to crack
down on widespread Medicare and Medicaid fraud. Turns out that may include Obamacare. The Department of Health and
Human Services announced in June, “Recent experience during and after the 2026 open enrollment period strongly suggests ongoing and per- sistent fraud, waste, and abuse in the system. “We estimate 2.6 million improper
and phantom enrollments remain, including over 1 million enrollments without a Social Security number.” The Paragon Health Institute esti-
mates 6.2 million improper enrollees in 2026. The premiums of healthy people
who use little care essentially cross- subsidize those who use a lot of care. If the premiums for phantom
enrollees come to an end, that will mean fewer premiums covering those who use a lot of care. In other words, the death spiral will
worsen, and we can expect even more people dropping out of Obamacare in the coming years. Obamacare was doomed because Democrats ignored long-standing actuarial principles. They want to cover their mistake
with taxpayer subsidies. They should accept their failure
and work with Republicans to pass workable health insurance reform.
Merrill Matthews is the Texas state chair of Our Republican Legacy.
OCTOBER 2026 | NEWSMAX 19
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