The Trump administration unveiled a sweeping proposal to eliminate $11 billion in fraudulent Obamacare spending, targeting illegal alien enrollment, ending “free” coverage loopholes, and requiring stricter verification of eligibility for government subsidies.
Key Takeaways
- The Trump administration’s first major healthcare proposal targets fraud and abuse in Obamacare marketplaces with stricter eligibility verification requirements
- The proposed rule would end Exchange coverage for DACA recipients, reversing a controversial Biden administration policy that was already blocked in certain states
- New measures would eliminate automatic enrollment for “free” plans and require a minimum $5 monthly premium for those failing to verify eligibility
- The rule aims to save taxpayers $11 billion by addressing nearly 300,000 complaints of unauthorized plan changes or enrollments reported in just eight months
- While critics claim the measures could reduce enrollment by up to 2 million people, supporters argue it restores program integrity and proper stewardship of taxpayer dollars
Trump Takes Aim at Obamacare Enrollment Fraud
President Trump’s administration has sent its first significant healthcare proposal to the White House Office of Management and Budget for review, targeting what officials describe as rampant fraud and abuse within the Affordable Care Act marketplace. The Centers for Medicare and Medicaid Services (CMS) is spearheading this effort to restore program integrity to a system that has been plagued by improper payments, fraudulent enrollments, and policies that have allowed ineligible individuals to receive taxpayer-funded healthcare benefits.
The proposal comes as Obamacare enrollment has reached a record high of 24.2 million people signing up for marketplace coverage through HealthCare.gov and state exchanges. However, this growth has been accompanied by mounting evidence of widespread fraud and misuse of the system. CMS has documented nearly 300,000 complaints of unauthorized plan changes or enrollments in just an eight-month period, highlighting the urgent need for reform.
Ending Benefits for Illegal Immigrants
One of the most significant aspects of the proposed rule is the elimination of Exchange coverage for Deferred Action for Childhood Arrivals (DACA) recipients. This move reverses a controversial Biden administration policy that expanded Obamacare eligibility to individuals without legal permanent residency status. Republican attorneys general had already successfully challenged this policy in court, resulting in a ruling that blocked DACA recipients from applying for coverage in several states.
“The Case Against Single Payer,” a book by Chris Jacobs, detailed how expanding government healthcare to non-citizens creates perverse incentives that strain the entire system and diverts resources from American citizens and legal residents.
The Trump administration’s proposal aligns with the president’s broader commitment to ensuring that American citizens, not illegal immigrants, are the primary beneficiaries of government programs. This approach prioritizes legal residents while addressing concerns about the sustainability of healthcare programs that have expanded beyond their intended scope.
Tackling “Free” Plan Fraud
Another key element of the proposal targets the issue of “zero-dollar premium” plans, which have contributed significantly to fraudulent enrollments and what industry insiders call “zombie” enrollees – individuals who are signed up for coverage they never requested and may not even know they have. The current system has created perverse incentives for unscrupulous brokers who can earn commissions by enrolling people in these “free” plans without their knowledge or consent.
To address this problem, the proposed rule would eliminate automatic special enrollment for “free” plans and require a minimum $5 monthly premium for individuals who fail to verify their eligibility for subsidies. Additionally, insurers would be allowed to require payment of past-due premiums before enrolling individuals who previously failed to pay for coverage, a common-sense measure that reflects how insurance typically works in other markets.
“Under the auspices of, ‘We have to go after fraud and improper enrollment’ — which yes, was well-documented last year, there was a lot of fraud from a handful of unscrupulous brokers — instead of going after the brokers who are guilty of this, this rule does nothing to prevent that behavior,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms.
Strengthened Verification Requirements
The third major component of Trump’s proposal focuses on enhanced verification processes for both income and special enrollment periods. Currently, individuals can self-attest their income when applying for subsidies, with only limited verification afterward. The proposed rule would implement stronger upfront verification requirements to ensure that only eligible individuals receive taxpayer-funded subsidies. This approach aims to prevent fraud before it occurs rather than attempting to recover improper payments after the fact.
“We look forward to working with the new administration to strengthen the affordable, accessible health care coverage options that 24 million Americans count on,” said Chris Bond, spokesman for the Blue Cross Blue Shield Association.
Similarly, the rule would tighten the verification process for special enrollment periods, which allow individuals to sign up for coverage outside the standard open enrollment period. These special periods have been exploited by people waiting until they become ill to obtain insurance, undermining the basic principles of insurance risk pools. By requiring proper documentation for qualifying life events, the administration aims to restore fairness to the system while maintaining access for those with legitimate needs.
Balancing Access and Accountability
While critics argue that these changes could reduce overall enrollment in the ACA marketplaces, supporters contend that the measures are necessary to ensure the program’s long-term sustainability and to protect taxpayer dollars. The proposal is expected to save approximately $11 billion by reducing improper spending on ACA subsidies, funds that could be redirected to improve healthcare access for eligible Americans or to address other pressing national priorities.
“If people can wait until they’re really sick they will. On the other hand, if you make them crawl through broken glass to get coverage, the people who are going to crawl through broken glass are the sicker people, because they really need it,” noted Sabrina Corlette, highlighting the delicate balance required in healthcare policy.
The proposed rule represents a significant step in President Trump’s commitment to reforming America’s healthcare system. By addressing fraud and abuse in the Obamacare marketplaces, the administration aims to create a more efficient, fair, and sustainable healthcare system that serves the needs of American citizens while being responsible stewards of taxpayer resources. Public comments on the proposed rule will be accepted for 30 days after publication in the Federal Register, with most changes set to take effect for the 2026 plan year.
