Obamacare enrollment will decline this year. A large share of that decline will result from people who never should have been counted as exchange enrollees finally being removed from the rolls. Much of the remainder will come from people who decide the coverage is not worth even the small share of the premium they must pay themselves.
A new Paragon study examines sign-up data from the 2026 open enrollment. We estimate there are 6.2 million improper enrollees — more than 1 in 4 people with an Obamacare plan. These improper enrollees claim to be in the lowest-income category to receive the highest Obamacare subsidy, but their numbers vastly exceed what is plausible given Census Bureau data.
The problem extends beyond people inaccurately reporting income. Insurers benefited from a business model in which taxpayers covered the lion’s share of the premium cost. Fraud rings formed to maximize the commissions insurers paid to brokers and enrollment entities.
RECLAIMING AFFORDABILITY: WANT AFFORDABLE HEALTHCARE? PUT CONSUMERS IN CONTROL
Exchange enrollment soared because of two Biden administration policies. First, Former President Joe Biden signed legislation that hiked Obamacare’s already large subsidies during COVID. This made coverage free for millions of applicants who claimed low incomes on their applications. Second, the Biden administration weakened program integrity measures and prioritized maximizing enrollment regardless of eligibility.
In 2025, taxpayers covered the full premium cost for 40% of enrollees — the year improper enrollment peaked. In 2026, plans remain heavily subsidized. The median net monthly premium for a plan chosen by enrollees this year is only $40, with taxpayers covering 94% of the cost. As premiums have surged, subsidies have covered almost the entire increase. Only 10% of sign-ups do not receive a subsidy.
The prevalence of fully subsidized coverage led to roughly 4 million phantom enrollees — fictitious applicants created to benefit insurers and brokers, along with those enrolled without their knowledge or who already had other coverage. One indicator of phantom enrollment is that by 2024, half of exchange sign-ups lacked basic information on race or ethnicity — a sharp increase from the pre-Biden era. Another indicator is that the share of those who did not use their plans at all reached 35% in 2024 — double the normal rate of plan nonuse.
Improper and phantom enrollment accelerated in 2023 and 2024 and persisted because of passive automatic reenrollment. Even for enrollees who did not use their plan the previous year and who had fully subsidized coverage, the government keeps them renewed. With the loss of the COVID-era subsidy boost, about one-third fewer enrollees have fully subsidized plans this year. Since phantoms cannot pay premiums, they will be dropped from the program when the bill goes unpaid.
The Trump administration has appropriately removed nearly 2 million improper enrollees already — people simultaneously enrolled in Medicaid and subsidized exchange coverage, along with individuals who failed to file required tax returns. The One Big Beautiful Bill Act requires fuller repayment of excess subsidies. This reform reduces incentives to understate income on exchange applications to inappropriately claim more subsidies.
Despite positive developments, much of the improper and phantom enrollment appears to have continued into 2026. Silver plan enrollment trends provide strong evidence that improper enrollment is more prevalent in states using the HealthCare.gov platform. The expiration of the COVID subsidy boost means that silver plans — the ones that offer the highest value to the lowest-income enrollees — are no longer fully subsidized. For low-income Obamacare enrollees, silver plans commonly have deductibles under $100 annually.
Yet millions of low-income enrollees have migrated into bronze plans with deductibles exceeding $7,000, often for premium savings of less than $30 per month. Economically rational consumers generally would not trade thousands of dollars in financial protection for minimal premium savings. The shift away from silver plans did not occur in states with their own exchanges. Brokers know they must switch phantom enrollees into other free plans because their gravy train ends if phantoms face a premium.
RECLAIMING AFFORDABILITY: 2026 MIDTERMS MAY BE COST OF LIVING REFERENDUM
Phantoms aside, the Left will portray declining exchange enrollment as evidence that Americans are losing affordable coverage. But if people decide coverage is not worth purchasing when they must contribute only a modest share of the premium themselves, that is not a policy failure. Taxpayers bear more than 80% of the cost of Obamacare plans, and heavily subsidized exchange coverage crowds out employer-provided coverage.
The policy goal should not be to maximize enrollment regardless of eligibility or cost. It should be to ensure that taxpayer-funded subsidies go only to eligible individuals and that exchange coverage provides sufficient value that people willingly bear a fraction of that cost.
Brian Blase is the founder and president of the Paragon Health Institute and coauthor of a new Paragon paper, The Persistent Obamacare Enrollment Fraud.