Chuck Grassley

07/07/2025 | Press release | Distributed by Public on 07/07/2025 17:39

Grassley Pushes CMS to Crack Down on Obamacare Fraud

07.07.2025

Grassley Pushes CMS to Crack Down on Obamacare Fraud

BUTLER COUNTY, IOWA - U.S. Sen. Chuck Grassley (R-Iowa), a senior member and former chairman of the Senate Finance Committee, is renewing calls for accountability after receiving information that builds on independent reports of widespread Obamacare fraud. In 2024, taxpayers reportedly footed the bill for approximately $20 billion in improper Obamacare subsidies. This number could exceed $27 billion in 2025. Based on information provided to Grassley's office, insurance agents are also using targeted internet advertisements to fraudulently enroll consumers with false income verification extension requests.

Last year, Grassley pushed for answers from top leaders in the Biden administration regarding their efforts to eliminate waste, fraud and abuse in the ACA marketplace. The Biden administration failed to respond to Grassley's request.

"The Biden administration's failure to adequately oversee these subsidies has had expensive consequences … The Wall Street Journal reported that in 2024 five million consumers may have inappropriately received health insurance coverage through subsidized Affordable Care Act (ACA) federal marketplace plans based on falsified income information, which may have cost the taxpayer an estimated $20 billion," Grassley wrote.

Background:

In 2021, the Biden administration increased premium tax credits (PTCs) for higher-income earners and reduced cost sharing through 2025. As a result, individuals whose income is within 100 and 150 percent of the federal poverty level (FPL) are eligible for fully subsidized health insurance plans. This policy change has compromised program integrity, particularly in states that have not expanded Medicaid.

According to CMS and other reporting, fraudulent enrollments occurred because insurance agents and brokers exploited vulnerabilities in the ACA's design.

In his letter, Grassley cites the Trump Department of Justice's (DOJ) February 19th indictment of Cory Lloyd and Steven Strong for engaging in a $161 million ACA enrollment fraud scheme.

Grassley applauds the Trump administration's program integrity measures through the marketplace integrity and affordability rule. The One Big Beautiful Bill also established some additional premium tax credit program integrity measures.

Text of the letter can be found HERE or below.

July 7, 2025

VIA ELECTRONIC TRANSMISSION

The Honorable Mehmet Oz
Administrator
Centers for Medicare & Medicaid Services

On June 20, 2024, The Wall Street Journal reported that in 2024 five million consumers may have inappropriately received health insurance coverage through subsidized Affordable Care Act (ACA) federal marketplace plans based on falsified income information, which may have cost the taxpayer an estimated $20 billion.[1] According to CMS, as well as other reporting, these fraudulent enrollments occurred because insurance agents and brokers exploited vulnerabilities in the program's design.[2] On July 8, 2024, I wrote to CMS with concerns regarding fraudulent enrollments and requested information on how the Biden administration's Department of Health and Human Services (HHS) and CMS had taken steps to combat fraud, waste, and abuse related to these enrollments and associated subsidies.[3] Unfortunately, the previous administration failed to provide a response.

The Biden administration's failure to adequately oversee these subsidies has had expensive consequences. For instance, on February 19, 2025, the Trump Department of Justice (DOJ) indicted Cory Lloyd and Steven Strong for engaging in a $161 million ACA enrollment fraud scheme.[4] According to the DOJ, "Lloyd and Strong targeted vulnerable, low-income individuals experiencing homelessness, unemployment, and mental health and substance abuse disorders, and, through 'street marketers' working on their behalf, sometimes offered bribes to induce those individuals to enroll in subsidized ACA plans."[5] Further, the two individuals used "misleading sales scripts and other deceptive sales techniques to convince consumers to state that they would attempt to earn the minimum income necessary to qualify for a subsidized ACA plan, even when the consumer initially projected having no income."[6]

Based on information provided to my office, I've been made aware of a similar type of fraud scheme used within the ACA marketplace.[7] This scheme involved targeted internet advertisements for free health insurance. These advertisements were used to entice consumers to fill out a webform with personal information which was then used by insurance agents to sign consumers up for healthcare in targeted zip codes. Those zip codes were in states that use the federally-facilitated marketplace (FFM), rather than state-based exchanges, and where preferred insurance companies had $0 premium plans.[8] Using information from the webforms, agents used HealthSherpa, one of the ten federally-approved private sector ACA federal marketplace enrollment websites, to sign consumers up. During open enrollment periods, agents entered hundreds of applications per day and if the consumer noted on the webform that their income wasn't between 100-150% of the federal poverty level (FPL), agents would fraudulently swap it out for a number to obtain maximum ACA federal marketplace plan premium subsidies and special enrollment period (SEP) eligibility. To keep fraudulent enrollments on the books for as long as possible, agents allegedly submitted false income verification extension requests and prepopulated income explanation forms rather than submitting actual proof of income.

So that Congress may conduct independent oversight of the ACA federal marketplace program, please provide the following information no later than July 21, 2025:

  1. Explain in detail the steps CMS has taken to detect, combat and deter the fraud scheme described above.
  1. What is CMS's estimate of:
    1. the number of fraudulent enrollments in subsidized ACA federal marketplace plans occurring from 2019-2025;
    2. the number of months fraudulently enrolled customers spent in subsidized ACA federal marketplace plans; and
    3. the cost of these fraudulent enrollments. Provide this information at the insurance agent, insurance agency, and health insurance company level.
  1. What efforts has CMS taken in coordination with the Internal Revenue Service (IRS) to recoup excess advanced premium tax credit payments? How much money has been recovered annually from 2019 to 2025?
  1. What steps does CMS take after it terminates an agent's ACA federal marketplace registration? Who does CMS communicate termination information to and does CMS provide those entities with any guidance in relation to managing the termination? Provide all records.
  1. Do insurance agencies face any consequences from CMS when their affiliated agents are terminated for improper activities or when they have disproportionately high rates of potentially fraudulent ACA federal marketplace plan enrollments? If yes, describe the consequences and any associated investigative processes.
  1. How many agents did CMS terminate for improper enrollment behaviors from 2019 to 2025? How many of those terminations has CMS rescinded? List the data by year and state.

Thank you for your prompt review and response. If you have any questions, please contact Tucker Akin with Committee staff at (202) 224-5225.

Sincerely,

Charles E. Grassley

Chairman

Committee on the Judiciary

-30-


[1] Brian Blase, The $20 Billion ObamaCare Subsidy Fraud, WSJ (June 19, 2024), https://www.wsj.com/articles/the-20-billion-obamacare-subsidy-fraud-abd89b0d; Brian Blase and Drew Gonshorowski, The Great Obamacare Enrollment Fraud, Paragon Health Inst. (June 2024), https://paragoninstitute.org/wp-content/uploads/2024/06/The-Great-Obamacare-Enrollment-Fraud_FOR_RELEASE_V2.pdf.

[2] Id.; 2025 Marketplace Integrity and Affordability Proposed Rule (CMS-9884-P), Cntrs. for Medicare & Medicaid Srvcs. (Mar. 10, 2025), at 4 & 86, https://www.cms.gov/files/document/MarketplacePIRule2025.pdf, (183,553 complaints were related to enrollments without consent and 90,863 were related to switches without consent); Julie Appleby, ACA Plans Are Being Switched Without Enrollees' OK, KFF Health News (Apr. 2, 2024), https://kffhealthnews.org/news/article/aca-obamacare-plans-switched-without-enrollee-permission-investigation/; Julie Appleby, Rising Complaints of Unauthorized Obamacare Plan-Switching and Sign-Ups Trigger Concern, KFF Health News (Apr. 8, 2024), https://kffhealthnews.org/news/article/aca-unauthorized-obamacare-plan-switching-concern/; Julie Appleby, After Public Push, CMS Curbs Health Insurance Agents' Access to Consumer SSNs, KFF Health News (Apr. 9, 2024), https://kffhealthnews.org/news/article/aca-marketplace-ssn-social-security-numbers-agents/; Julie Appleby, When Rogue Brokers Switch People's ACA Policies, Tax Surprises Can Follow, KFF Health News (April 15, 2024), https://kffhealthnews.org/news/article/aca-obamacare-plans-unauthorized-enrollment-tax-problems/.

[3] Letter from Senator Charles E. Grassley to Secretary Xavier Becerra, U.S. Dept. of Health and Human Servs., and Administrator Chiquita Brooks-LaSure, Cntrs. for Medicare & Medicaid Servs. (July 8, 2024), https://www.grassley.senate.gov/imo/media/doc/grassley_to_hhs_and_cms_-_aca.pdf.

[4] Press Release, Department of Justice, President of Insurance Brokerage Firm and CEO of Marketing Company Charged in $161M Affordable Care Act Enrollment Fraud Scheme (Feb. 19, 2025), https://www.justice.gov/opa/pr/president-insurance-brokerage-firm-and-ceo-marketing-company-charged-161m-affordable-care.

[5] Id.

[6] Id.

[7] Documents on file with Committee Staff.

[8] Notes and Documents on file with Committee Staff.

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Chuck Grassley published this content on July 07, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on July 07, 2025 at 23:39 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at support@pubt.io