A new report by the conservative Paragon Health Institute is reigniting debate over the integrity of Affordable Care Act insurance marketplaces, claiming that roughly 6.2 million people—or nearly 27 percent of all 2026 exchange sign-ups—were improperly enrolled.
Released June 2, the paper, titled *The Persistent Obamacare Enrollment Fraud*, estimates that improper subsidies tied to these enrollments could cost U.S. taxpayers up to $25 billion this year, approximately one-quarter of total projected federal spending on ACA premium tax credits.
The report comes from a think tank with close ties to the Trump administration; Paragon President Brian Blase previously served as a health policy advisor in the first Trump White House. The findings have already drawn attention on Capitol Hill, where Republican lawmakers have long criticized the exchange system’s eligibility verification process.
According to Paragon, the problem persists at roughly the same scale as the group estimated for 2025, suggesting that administrative fixes have failed to curb improper sign-ups. The institute identifies several drivers behind the figures, including income misreporting that allows ineligible applicants to qualify for generous subsidies, overlapping coverage with Medicaid or employer-sponsored plans, and what the authors call “phantom enrollees”—individuals signed up for coverage who never file medical claims.
The largest component of Paragon’s estimate centers on enrollees reporting incomes between 100 and 150 percent of the federal poverty level. The institute argues that in some states—particularly those that have not expanded Medicaid—the number of exchange sign-ups in this income bracket exceeds plausible estimates of the eligible uninsured population derived from Census Bureau data. Paragon posits that some applicants may be deliberately overestimating income to clear the threshold for subsidies, while others may be enrolled without their knowledge by unscrupulous agents or navigators seeking commissions.
However, the report’s methodology and conclusions face significant pushback from other health policy experts. The insurance industry trade group AHIP has previously challenged Paragon’s “phantom patient” thesis, arguing that a substantial share of zero-claim enrollees is actuarially normal and necessary for a functioning risk pool. Critics also note that Paragon’s comparison of real-time CMS enrollment data with Census Bureau population estimates introduces meaningful statistical uncertainty, particularly given income volatility among low-wage workers.
Analysts such as Andrew Sprung have further cautioned that the ACA already includes a reconciliation mechanism: enrollees who receive too much in advanced premium tax credits based on income projections must repay excess amounts when they file taxes. That process, critics say, suggests the net cost of improper payments may be lower than Paragon’s headline $25 billion figure, which treats point-of-application discrepancies as final losses.
The Washington Post and other outlets have reported that the Biden-era enhanced subsidies, which reduced premiums to $0 for millions of low-income enrollees, created incentives that Paragon contends are ripe for abuse. With those subsidy enhancements set to remain a focal point of congressional budget debates, the 27 percent figure is likely to feature prominently in arguments for stricter verification requirements.
Independent verification of Paragon’s claims remains difficult. The underlying IRS reconciliation data and insurer-level utilization records are not publicly available in sufficient detail for outside researchers to fully audit the estimates. Nonpartisan watchdogs such as the Government Accountability Office have not independently confirmed a 27 percent improper enrollment rate in the exchanges.
For now, the Paragon report adds ammunition to GOP efforts to overhaul ACA oversight, even as opponents warn that tightened eligibility rules could inadvertently strip coverage from millions of legitimately enrolled Americans caught in the churn between Medicaid and marketplace plans.
