House Republicans point to Paragon's HealthCare.gov enrollment fraud estimates

A think tank with strong Republican ties has started a battle in Washington over whether HealthCare.gov is full of users who have lied about their income to maximize premium tax credit subsidies and subsidies that minimize deductibles, coinsurance payments and other out-of-pocket costs.

The Paragon Health Institute recently published an analysis suggesting that, in many states, the number of users with income levels qualifying them for high subsidy levels is clearly much higher than the number of residents in those states without health coverage from Medicaid, Medicare or employer-sponsored group health plans.

Another sign of fraud is that, in Florida and some other states, the number of enrollees who have reported income exactly at the level needed to qualify for the maximum ACA premium tax credit subsidy levels is very high, the analysts say.

Three House committee chairs — House Energy Chair Cathy McMorris Rodgers, R-Wash.; House Ways and Means Chair Jason Smith, R-Mo.; and House Judiciary Chair Jim Jordan, R- Ohio — have sent a letter highlighting the institute allegations to the head of the U.S. Government Accountability Office and the inspector general for the U.S. Department of Health and Human Services,

Paragon study details: The Paragon analysts reported, for example, that they believe that the number of Florida HealthCare.gov users who have reported having income of 100% to 150% of the federal poverty level, which qualifies those users for maximum Affordable Care Act exchange plan subsidies, is about four times higher than their estimate of the number of Florida residents in that income category without employer or government health coverage.

Exchange plan users are much more likely to report having income from 100% to 150% of the federal poverty level in states that have not used ACA funding to expand eligibility for Medicaid for low-income working-age adults, the analysts note.

The analysts suggest that about 4.8 million of the 9.4 million ACA exchange plan users who have zero-premium plans may not qualify for zero-premium coverage.

The backdrop: Since the COVID-19 pandemic began, the federal government has offered ACA premium tax credits that are much higher than the usual ACA subsidies.

The usual cutoff for access to premium tax credit subsidies is 400% of the federal poverty level, or $60,240 in 2024 in most of the United States for an individual and $124,800 for a family of four.

Today, the subsidy is available to higher-income people if the cost of coverage purchased through an ACA public exchange would take up too much of their income.

Democrats in Congress are now trying to make the higher level of subsidies permanent.

The Congressional Budget Office recently estimated that making the pandemic-period subsidy increases permanent would increase the federal budget deficit by $335 billion over the period from 2025 through 2035.

The increase would help 6.9 million extra people pay for health coverage, including 2.1 million with income over 400% of the federal poverty level.

The House Republicans’ view: The House committee chairs contend that the Paragon report reflects the dangers associated with making the emergency exchange plan subsidy increases permanent is a bad idea.

The lawmakers cited the Paragon argument that about half of HealthCare.gov enrollees qualify for zero-premium plans by reporting incomes from 100% to 150% of the federal poverty level.

“While individuals may reasonably misestimate their income at any given point, the scale of the problem suggests malicious intent from certain actors involved,” the House Republicans write in their letter. “There have been documented issues with broker behavior surrounding these ‘zero-premium’ plans, with reports and litigation detailing practices of consumers having their plan switched by such brokers without their consent.”

Related: Senator urges CMS to hold rogue brokers accountable in ACA ‘plan-switching’ scheme

“Estimates show the cost of improperly enrolled individuals in ‘zero-premium’ plans is $15 billion to $20 billion per year and potentially as high as $26 billion per year,” the lawmakers write, citing the Paragon figures. “If these estimates are accurate, it implies that these improper payments represent more than half the cost of making the expanded subsidies permanent.

NABIP reacts: The National Association of Benefits and Insurance Professionals said in a response that Paragon is opposed to ACA exchange plan subsidies and federal group health subsidies.

NABIP objected to the institute analysts’ criticism of agents’ role in the ACA system.

“By advocating for policies that could increase financial burdens on consumers, the report fails to consider the real-world impact on American families,” NABIP says. ”Through constructive dialogue and targeted reforms, we believe it is possible to enhance the system’s effectiveness and ensure that all Americans have access to affordable, high-quality health care.”