Breaking: Vance/Oz to kick ~760,000 off of ACA coverage and/or subsidies based on "fraud" claims "predicted" by an AI model

 

via the Wall St. Journal:

WASHINGTON—Vice President JD Vance’s antifraud task force is set to remove hundreds of thousands of enrollments from the Affordable Care Act’s public exchanges, saying those enrollees don’t meet eligibility requirements or don’t exist at all.

...Vance and Dr. Mehmet Oz, the administrator for the Centers for Medicare and Medicaid Services, or CMS, are set to announce they are canceling subsidy payments for allegedly unauthorized and fraudulent enrollments in the ACA, also known as Obamacare, for 760,000 individual accounts, according to administration officials. They say those cancellations would amount to saving an estimated $2.2 billion in taxpayer funds.

It's important to note that this doesn't clarify whether "removing enrollments" means actually canceling their policies (which is a contract between the enrollee and a private insurance carrier) or if it just means canceling their federal subsidies (which would mean that the enrollees have to start paying full price, and may have subsidies from earlier this year clawed back).

Officials said those enrollments include people who are unaware that they are enrolled in the program, are ineligible for the program because they have employer-provided healthcare or earn an annual income greater than 400% above the federal poverty level.

...CMS will also announce that it is cutting off hundreds of brokers and agents who signed people up for government healthcare, and is issuing a nationwide moratorium on all new agents and brokers, who are paid by insurance companies and can receive up to $25 a month for each new enrollee.

Administration officials said some brokers have taken advantage of this and signed individuals up for healthcare without checking identification. Federal law allows CMS to block agents from the exchange, or blacklist them.

...CMS has already cut off 66 agents from the system and plans to terminate 469 more, according to administration officials.

CMS is planning to check the immigration status and income eligibility of 415,000 current enrollees. Federal regulators are also ending a Biden-era policy that officials said permitted enrollees to continue receiving monthly subsidies even after declining to supply mandatory identity and eligibility documentation.

So there's basically three categories they're talking about:

• Enrollees who have no idea that they're actually enrolled (this goes to the agent/broker fraud scams which I've written about several times over the past few years)

• Enrollees who are simultaneously enrolled in employer coverage as well as ACA coverage

• Enrollees who earn more than 400% FPL and are thus no longer eligible for federal ACA tax credits

As I've written about before, the agent/broker fraud issue has been a real one (on the federal exchange, at least) for several years now, although the Biden Administration took measures to crack down on this issue in 2024, and the Trump Regime took more aggressive action in 2025, so I find it difficult to believe that there's that much broker/agent fraud still happening. HOWEVER, some level of this likely is still happening, so to the extent that it is, fair enough.

I haven't heard too much about the second category (those dual-enrolled in ACA & employer-based coverage), although I'm willing to accept that there may be some cases like this. I do wonder, however, whether this ties into the so-called "Family Glitch" which was closed by the Biden Administration but which may have been re-opened by the Trump Regime.

It's the third category which I find the most noteworthy and concerning: There's no way of knowing for certain whether any enrollees will turn out to have a household MAGI income greater than 400% FPL until they actually file their 2026 federal income taxes in spring 2027.

Remember, the enhanced subsidies expired on 12/31/25, so this doesn't apply to anyone who earned more than 400% FPL last year...which means they're talking about 2026 incomes...except that it's only mid-September as of this announcement.

There are millions of Americans who may earn around 400% FPL each year, but whose income can range widely from one year to the next--they might earn more than 400% one year and less the next. When you apply for ACA exchange coverage you have to project your estimated income for the upcoming year. If they project an estimated 2026 income below 400% FPL but end up actually having a MAGI income over 400% FPL, that isn't fraud.

It's literally how the ACA is designed to work, and it's no different than someone who's self-employed trying to project their quarterly taxes for the following year: If you overestimate, you end up getting a tax refund. If you underestimate, you have to pay more in taxes.

The same applies here: If you project your income to be under 400% FPL but it turns out to be over 400% FPL, the worst that happens is that you have to pay back the full amount of federal ACA subsidies when you file your taxes the next spring.

In fact, there's several perfectly legal ways of pushing your MAGI income below 400% FPL:

It's also worth noting that contributions to a pre-tax retirement account and/or a health savings account will reduce your MAGI, which is what the IRS uses to determine your premium tax credit eligibility. (Note that in order to contribute to a health savings account, you must have coverage under an HSA-qualified high-deductible health plan.) You should consult your tax advisor to learn more about this.

Even if you gross more than 400% FPL, there are several ways of knocking it below the cut-off threshold...and some of these can even be done after the end of the calendar year, as long as they're done before you file your taxes for that year.

Again: there's no way for the Trump Regime to know for certain whether a given household's MAGI income is above or below 400% FPL for the current year until they file their income taxes the following spring.

So how are they able to be so certain that hundreds of thousands of enrollees are ineligible for calendar year 2026 when there's still 3 1/2 months left in 2026? They can't...but they're claiming to...based on, according to the just-concluded press conference...you guessed it...an AI model.

Here's the relevant exchange from the press conference:

Reporter: "Mr. Ferguson mentioned American AI innovation was playing a role. Can you talk about how AI is being used to identify these fraudulent cases you're identifying?"

"Yes, I'll let the chairman speak to that, but my understanding is that we're using technology and tools to identify fraud at breakneck pace. So one just very concrete example. When you cut off a fraudster from one program, they sometimes will try to go and milk another program, a similar program, but you can actually see using modern digital technology tools, you can actually see when one person who is defrauding one program migrates to another program.

"For program eligibility and diseligibility based on fraud, it's not the same standard of proof as like a criminal conviction. It's basically pattern recognition and if you don't have AI, machine learning, etc. participating in recognizing patterns that are likely to be fraud, you need to have human beings basically hand-counting this stuff. That is a, that is one of the problems that we were confronting. Could have been fixed in the last administration, but one of the problems we were confronting is that there were tools available to dramatically speed the rate at which we were detecting fraud in dozens of programs, especially at HHS, which at $2 trillion is the biggest one. And that's what we have done, and it's one of the most important things that the task force did. If you read the executive order creating the task force, it set a bunch of technological requirements that agencies have to meet to comply with the EEO, most of which are about being able to detect fraud before it happens, before claims are paid, and then they can be cut off.

In other words..."Pre-Crime."

So, what happens if the AI model gets it wrong and potentially ruins the lives of people who were legally eligible for the subsidies after all?

Now, of course, in most of those cases, if you aren't fraudulent, you can appeal back to the agency, explain your situation, and the agency will make payment, but as Dr. Oz has said repeatedly, when we do these big cutoffs, almost no one comes.""

Oh. Not easy to do when you're in the middle of a chemotherapy session...assuming that you don't get that cut off midway through the series due to having your health insurance policy lapse due to non-payment.

Oh yeah...in case you think I'm exaggerating the possibility of this being a problem, a reminder that just a week ago it was reported that UnitedHealthcare has been using an AI model with a 90% error rate to deny medical claims.

I'll be writing more about this soon, but in the meantime here's Protect Our Care's statement on this morning's announcement:

Washington, D.C. — First reported in the Wall Street Journal, Vice President JD Vance’s phony anti-fraud task force will cancel subsidy payments for over 760,000 people purchasing coverage on the ACA Marketplace. Described by the Wall Street Journal as “one of the largest administrative purges” under the Trump administration, this decision will force higher costs and throw thousands of otherwise eligible Americans off their coverage.

Donald Trump and his GOP allies claim to care about fraud, but Trump abused his power to pardon the nation’s biggest health care fraudsters while families have their health care ripped away. Last May, the Trump administration reinstated 850 brokers and agents suspected of fraud.

This news comes on the heels of the Trump administration gutting Medicaid and the Affordable Care Act (ACA) to fund tax breaks for billionaires and big corporations. Costs have skyrocketed, and 8 million people have already lost their coverage, and that number will only get higher as Republicans continue their crusade on health care.

Note: By my own estimates it's actually more than 10 million Americans who have already lost coverage.

Protect Our Care President Brad Woodhouse issued a statement:

“This so-called task force is nothing more than a bullshit distraction — a political stunt designed to throw even more people off their coverage while pretending to save taxpayers’ money. At a time when millions of Americans are already losing coverage and facing skyrocketing costs, Vance and this administration are making the crisis exponentially worse. They are piling on more red tape, more confusion, and more opportunities for people to lose the coverage they rely on. Families need coverage they can afford and count on when they get sick. Vance’s task force won’t accomplish that. It’s a smokescreen for an administration whose sole mission is to make it harder to get and stay covered but to shower billionaires with tax breaks instead.”

Here's the official press release from the Centers for Medicare & Medicaid Services:

As part of the ongoing efforts of the White House Task Force to Eliminate Fraud to crush fraud in the healthcare system and protect taxpayer dollars, the Centers for Medicare & Medicaid Services (CMS) is taking aggressive, sweeping actions within the Federal Marketplace — canceling approximately 315,000 unauthorized enrollments covering more than 760,000 individuals, which is expected to result in a return of roughly $2.2 billion in taxpayer-funded subsidies.

CMS has established a Federally-facilitated Exchange (FFE) anti-fraud coordination group that brings together leadership from across CMS and the U.S. Department of Health and Human Services (HHS) to drive a unified, sustained response to fraud in the Federal Marketplace. The group will meet regularly to coordinate enforcement and program integrity efforts and maintain momentum in the fight to crush fraud in the FFE.

“We are shutting down unauthorized Marketplace enrollments and returning approximately $2.2 billion in taxpayer-funded subsidies,” said HHS Secretary Robert F. Kennedy, Jr. “CMS is strengthening safeguards, pursuing bad actors, and holding agents and brokers accountable when they break the rules. Under President Trump, HHS will protect Americans’ health coverage and ensure taxpayer dollars reach the people they are intended to serve.”

These actions are part of CMS’ three-pronged strategy to prevent fraudulent and improper enrollments, remove existing unauthorized enrollments, and strengthen oversight and enforcement of agents and brokers participating in Exchanges.

“Every dollar lost to fraud is a dollar taken from hardworking taxpayers and the Americans these programs are intended to serve,” said CMS Administrator Dr. Mehmet Oz. “We are using our data, enforcement authorities, and stronger safeguards to identify fraud and abuse, stop it, and recover taxpayer dollars. We are making sure Americans — not bad actors — remain in control of their health coverage.”

CMS will continue working with health insurance companies to identify and investigate potentially unauthorized enrollments, cancel those confirmed to be unauthorized, and recoup and end associated taxpayer-funded subsidies.

The agency is also holding agents and brokers accountable for violating Marketplace standards. Since January 2026, CMS has issued termination notices for over 200 non-compliant agents and brokers. This summer, CMS issued 569 notices of intent to terminate to those agents and brokers who submitted 2026 applications without key applicant information, such as Social Security Numbers (SSN).

CMS data also show that agents and brokers who first registered for the 2026 plan year represent a small fraction of all agent- and broker-assisted enrollments but account for a disproportionate share of unauthorized enrollments and other high-risk activity in the Marketplace. To address this risk, CMS is releasing an Interim Final Rule announcing a temporary moratorium on new registration for the 2027 plan year for agents and brokers without an active Exchange Agreement for 2026.

CMS is also strengthening program integrity protections by:

• Requiring all existing agents and brokers to re-identity proof through Login.gov or ID.me;
• Requiring applications involving an agent or broker to include SSN or immigration document numbers that CMS can verify for all non-newborn applicants through all application channels;
• Updating the system to prevent agents and brokers from being added to applications that consumers should be completing on their own through HealthCare.gov; and
• Requiring electronic consumer authorization before an agent or broker can act on a consumer’s application or enrollment.

Taken together, these measures strengthen Marketplace integrity, hold bad actors accountable, and better protect consumers and taxpayers from unauthorized activity.

Here's the detailed actions they're supposedly taking:

Fraud and improper enrollments in the Health Insurance Marketplace® harm consumers, burden taxpayers, and undermine the integrity of the Federal Marketplace. CMS has identified a pattern of unauthorized enrollments and suspicious agent and broker activity in the Federal Marketplace. In response, the agency has moved aggressively to address these issues through a three-pronged strategy: preventing fraudulent and improper enrollments upfront; removing existing unauthorized enrollments; and enforcing CMS regulations governing agents and brokers.

CMS has launched coordinated efforts with health insurance companies to identify enrollees associated with suspected unauthorized enrollments and cancel confirmed unauthorized enrollments. At the same time, the agency has focused on strengthening policies and enforcing existing regulations governing agents and brokers who assist consumers with enrollment.

Cancellation of Unauthorized Enrollments

On August 31, 2026, CMS canceled approximately 315,000 enrollments covering over 760,000 individuals after confirmation that these enrollments were unauthorized. This conclusion was the outcome of CMS and health insurance companies review and investigation in accordance with CMS’s existing process for unauthorized enrollments. CMS expects this will result in a return of approximately $2.2 billion in advance payments of the premium tax credit (APTC) for these canceled enrollments.

OK, according to this, they've already canceled 760,000 people's "enrollment," though I still can't tell whether this refers to the subsidies only or the actual policies themselves.

CMS will continue working with health insurance companies to identify and investigate potentially unauthorized enrollments, cancel those confirmed as unauthorized to prevent improper subsidy payments in the future, and recoup the associated past APTC payments.

Termination of Non-Compliant Agents and Brokers

Since January 2026, CMS has sent termination notices to over 200 non-compliant agents and brokers. This summer, CMS issued 569 notices of intent to terminate Exchange Agreements to agents and brokers that submitted 2026 applications without identifying applicant information, such as a Social Security Number (SSN). The timeline for non-compliant agents and brokers to respond for the first 100 of the 569 notices of intent to terminate has concluded, and 66 have already received termination notices. CMS expects to send additional termination notices once the timeline for non-compliant agents and brokers to respond to the remaining 469 notices of intent to terminate concludes.

CMS will continue to investigate and issue notices of intent to terminate Exchange Agreements to agents and brokers who we identify are noncompliant with Marketplace standards. CMS will also support state Departments of Insurance and health insurance companies in their own efforts to identify and take action on non-compliant agents and brokers.

Moratorium on New Agent/Broker Registration

CMS data show that agents and brokers who first registered for the 2026 plan year represent a small fraction of all agent/broker-assisted enrollments, yet they account for a disproportionate share of unauthorized enrollments and other high-risk activity in the Marketplace. Compared to agents and brokers who registered before 2026, this group of newly registered agents and brokers is responsible for agent/broker-assisted enrollments that are:

• 2.8 times more likely to have unresolved income verification issues;
• 2.7 times more likely to be missing Social Security Numbers;
• 2.6 times more likely to have unresolved citizenship or immigration status verification issues;
• 1.6 times more likely to use Special Enrollment Periods not subject to verification;
• 1.4 times more likely to include Medicaid denial attestations; and
• 1.4 times more likely to be found dually enrolled in Medicaid/CHIP and Marketplace coverage

To respond to the heightened risk presented by newly registered agents and brokers, CMS is announcing a temporary moratorium on the registration of agents and brokers for 2027 who do not have an active Exchange Agreement for 2026.

Additional Program Integrity Protections

In addition to the above actions, CMS has implemented several new protections against agent and broker fraud. First, all existing agents and brokers are now required to re-identity proof through either Login.gov or ID.me. Second, all applications involving an agent or broker must include Social Security Numbers or immigration document numbers that CMS can verify for all non-newborn applicants. Third, CMS now prohibits agents and brokers from being added to applications that consumers should be completing on their own through HealthCare.gov. Fourth, in advance of Open Enrollment, CMS will implement a requirement for electronic consumer authorization before an agent or broker can take any action on an application or enrollment.

Strengthening State and Industry Partnerships

State departments of insurance play an important role in anti-fraud efforts, and CMS maintains a longstanding relationship with them both directly and through the National Association of Insurance Commissioners (NAIC). CMS is strategically working with NAIC and states on anti-fraud work, including increased data sharing, enforcement, and best practices for protecting consumers.

Looking ahead, CMS will continue to ramp up anti-fraud efforts. In preparation for Open Enrollment, CMS will provide training and communications to agents and brokers concerning new requirements. Consumers will also receive communications for tips on preventing fraud and protecting themselves.