Pandemic-Era Obamacare Subsidies Draw Scrutiny Amid Fraud Concerns

House Democrats are moving to extend pandemic-era Obamacare subsidies without new safeguards, a step critics say risks compounding fraud and masking the true cost of the Affordable Care Act, as recent federal findings and state-level cases raise alarms about weak verification and oversight.

A Government Accountability Office (GAO) report released last month found that enhanced federal subsidies are already flowing to ineligible recipients nationwide, including fake identities, duplicate Social Security numbers, and even deceased individuals. The report concluded that federal systems failed to adequately verify identity, income, or eligibility before approving coverage.

Minnesota’s recent experience has intensified the debate. The state has faced a series of high-profile fraud cases across multiple programs, prompting critics to argue that large federal outlays routed through state-administered systems can invite abuse without rigorous enforcement.

Since 2018, Minnesota’s Medicaid spending has totaled roughly $18 billion, with the federal government covering about 64% of the costs. Prosecutors allege widespread fraud across 14 state-run programs. While not all cases involve health care, opponents of extending subsidies without reform say the state’s record illustrates the risks when funding expands faster than accountability measures.

The GAO’s findings detailed how vulnerabilities in the Affordable Care Act’s subsidy framework can be exploited. In late 2024, the watchdog created 20 fictitious applicants and found all were approved for subsidized coverage. Eighteen of those fake enrollees remained enrolled and subsidized in 2025, according to the report.

The GAO said coverage was approved with little or no documentation, sometimes using falsified records. In some instances, brokers enrolled applicants without their presence by contacting call centers. The agency estimated that more than $12,300 per month was paid to insurers on behalf of the fake identities it created.

The report also found subsidies paid for individuals who had died. GAO investigators identified about 58,000 Social Security numbers receiving subsidies that matched deceased individuals, including roughly 7,000 deaths that occurred before coverage began. An estimated $94 million was paid to insurers for those enrollees.

Despite those findings, Democrats argue that the enhanced subsidies have made coverage more affordable and helped stabilize enrollment. In 2024, about 90% of subsidy-eligible enrollees had access to plans costing $10 per month or less.

Republicans counter that affordability gains have come with soaring taxpayer exposure. Independent analysis of insurers’ mandatory filings shows that in 2024, taxpayers paid nearly 80% of premiums for subsidized Obamacare plans, up from about 30% in 2014. Federal payments to insurers totaled roughly $114 billion in 2024—more than double pre-pandemic levels and about six times higher than in 2014. The Congressional Budget Office reported that the acceleration continued into 2025.

House Republicans have advanced an alternative, the Lower Health Care Premiums for All Americans Act, which they say would reduce costs while restoring oversight. The package would fund cost-sharing reduction payments beginning in 2027 to stabilize the individual market, increase transparency, lower prescription drug costs, and expand coverage options for workers and small businesses.

Supporters of the Republican approach say targeted reforms can lower premiums without extending subsidies “as-is.” They also point to proposals such as the Working Families Tax Cut, which they say would cut waste, fraud, and abuse in programs like Medicaid while preserving benefits for vulnerable populations.

As the House debates whether to extend the pandemic-era subsidies, the question remains whether Congress will pair affordability with new guardrails—or accept the risks identified by federal auditors as the cost of broader coverage.