Obamacare’s premium tax credit is plagued with fraud, Congress’ chief watchdog said Wednesday, erecting new hurdles for Democrats who insist on expanding the program and have even forced a government shutdown over the issue.
Investigators at the Government Accountability Office said they filed bogus applications for the advance premium tax credit in 2024 and 2025, and most of them were approved.
In one application, investigators included fake proof of citizenship, which the government accepted as legitimate.
The investigators identified tens of thousands of cases in which benefits were paid to Social Security numbers of people who were likely deceased.
Investigators found tens of thousands of other instances of double-dipping, where people claimed more than 365 days’ worth of benefits in a single year.
In one case, a single number was used for more than 125 claims, worth more than 71 years of health coverage in 2023 alone.
SEE ALSO: Democrats refusing to negotiate on Obamacare subsidies
Rep. Jodey Arrington, Texas Republican and chairman of the House Budget Committee, called the GAO’s report a “bombshell” that undercuts Democrats’ demands to expand Obamacare subsidies.
“It was Democrats who shut the government down for a record 43 days with the demand of making this program permanent at a cost to taxpayers of over $400 billion,” Mr. Arrington said. “Now, Democrats have the audacity to demand Republicans extend these fraud-ridden subsidies.”
The premium tax credit, part of the 2010 Affordable Care Act, helps subsidize the cost of health coverage on Obamacare’s marketplace exchanges. Americans who don’t have insurance coverage through their employers or a government program such as Medicaid can buy plans on the exchanges.
The credit can be taken as an advance, which means the government pays insurers every month, reducing the beneficiary’s monthly bill and easing the burden of having to claim a reimbursement on annual tax returns.
Congress expanded the tax credit during the pandemic emergency to boost the income ceiling and make the subsidy more generous. That expansion expires at the end of this year.
Democrats refused to approve legislation funding the government into fiscal 2026, which began Oct. 1, unless it also extended the expanded credit. Republicans resisted, leading to the longest government shutdown in U.S. history.
The shutdown ended last month when some Democrats relented, letting the government reopen while preserving the tax credit fight.
“There is absolutely no justification for perpetuating these subsidies or the failed government-controlled Obamacare system Democrats are artificially propping up,” Mr. Arrington said Wednesday.
Democrats say insurance costs will soar for millions of Americans next year unless the pandemic subsidies are extended.
They are also pushing for a rollback of changes to Medicaid eligibility that Republicans included in President Trump’s One Big Beautiful Bill Act, signed in July.
Republicans said the report suggests rot at the core of the Obamacare-based system.
“Rather than simply rubber-stamp more bad spending and failed policies, we must take action to prevent further harm,” said Rep. Jason Smith, Missouri Republican and chairman of the Ways and Means Committee.
GAO investigators said fraud has long been a problem with the advance tax credit. They pointed to a 2016 report that found exchanges, some run by states and others by the federal government, approved bogus applications.
Investigators filed more fabricated applications for 2024 and 2025, and most were approved.
In plan year 2024, all four fictitious applications were receiving subsidized coverage through a federally run marketplace.
Eighteen of 20 fictitious applications filed for plan year 2025 were still receiving coverage as of September.
In some cases, the investigator used falsified documents to support the claims, and those documents were accepted. In one 2024 case, the GAO submitted fake proof of citizenship, and it was “verified.”
In other cases, the government never requested documents to prove eligibility.
In one of the 2024 cases, the government approved an estimated income based on documentation submitted with the application. The problem was that the GAO never submitted any documentation.
“Such weaknesses in appropriately generating and resolving data matching inconsistencies may allow ineligible applicants to receive subsidized insurance coverage,” the GAO said.
For plan year 2025, the GAO submitted 20 fake applications. All but one were initially approved, and since then, only one was canceled after failing to provide the requested verification documents.
Eighteen others remained active and combined to collect more than $10,000 in bogus monthly payments.
The advance premium tax credit totaled nearly $124 billion in government spending in 2024.
The GAO said it cannot estimate how much of that amount is going to fraudulent applications because its covert testing is not generalizable to the overall population of recipients.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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