I have spent more than a decade as a designated expert witness on fiduciary duty, testifying in federal and state courts about what happens when the people managing other people’s money stop checking who is actually entitled to it. Every case follows the same pattern. Someone stopped verifying. The losses piled up quietly until an audit forced them into daylight. Congress is now running that exact experiment on a national scale, and it is doing so with your money.
The Senate has spent the better part of a year fighting over whether to extend the enhanced Obamacare premium subsidies that lapsed on Jan. 1. The House passed a three-year extension in early January, with 17 Republicans crossing the aisle to join Democrats. The Senate has not moved it. Democrats forced the longest government shutdown in American history over this exact fight last fall and came away empty-handed. Premiums have since spiked for millions of enrollees, and both parties are gearing up to relitigate the whole mess before the midterm elections.
Nobody in this fight is asking the question a fiduciary asks first: Who is actually eligible for the money already going out the door?
The Paragon Health Institute, a health policy research group, has spent the past two years answering that question, and its numbers should stop the debate cold. Paragon estimates that 6.6 million people enrolled in Obamacare’s Medicaid expansion in 2024 were likely ineligible under federal income rules, at an annual federal cost of $36.9 billion. On the subsidized exchange side, the group estimates 6.4 million people misreported their income in 2025 to qualify for bigger subsidies, concentrated among those claiming incomes between 100% and 150% of the federal poverty line, the band where subsidies zero out a household’s premium entirely. That misreporting cost taxpayers more than $27 billion last year alone.
This is not just one advocacy group crying wolf. Paragon and the Economic Policy Innovation Center separately calculated that Medicaid issued nearly $1.1 trillion in improper payments from 2015 through 2024, more than double what the Centers for Medicare and Medicaid Services’s own audit program reported for the same decade. In December, the Government Accountability Office testified before the House Judiciary Committee that Obamacare exchanges approved 96% of fictitious applications GAO submitted to test the system. GAO also found that $21 billion in subsidy payments sent to insurers in 2023 has never been properly accounted for, and that 68,000 Social Security numbers stayed enrolled in marketplace plans for more than a year straight. The Congressional Budget Office has separately validated a chunk of Paragon’s methodology. CMS itself, in a proposed rule this year, confirmed a striking fact: More people picked subsidized exchange plans in the 100% to 150% poverty-line band than the Census Bureau says actually live at that income level in the first place.
The mechanism behind this is not complicated, and anyone who has run a private fund understands it instantly. States get a 90% federal match for Medicaid expansion enrollees versus a much lower match for traditional beneficiaries like children, the disabled, and the elderly. Every incentive in the system points toward classifying people as expansion enrollees and leaving them there indefinitely. On the exchange side, insurers get paid whether or not an enrollee ever uses the coverage. CMS data released this year show insurers collected $35 billion in 2024 for exchange enrollees who never touched their plan, a “ghost enrollment” rate that has roughly doubled since the enhanced subsidies arrived. If I ran a fund that collected fees on client accounts nobody could verify existed, the Securities and Exchange Commission would shut me down, and I would deserve it. Health insurers and state Medicaid agencies have been running that exact playbook for years with no equivalent oversight.
To be fair, not every dollar in these estimates represents intentional fraud. Some of it is ordinary churn, people who lose eligibility for a month and regain it, or who get counted twice during a coverage gap. Advocacy groups on the Left argue that tightening verification will knock legitimate low-income families off their coverage along with the ineligible ones, and that is a real risk worth weighing seriously. But churn does not explain a state enrolling more people in a subsidy band than the census says live there. GAO does not run fictitious application tests because it is worried about paperwork delays. A 96% hit rate on fake applications signals a system built to be gamed, not a program suffering from ordinary administrative friction.
BEHIND OBAMACARE’S LOOMING ENROLLMENT DROP
Senate Majority Leader John Thune (R-SD) said as much on the floor in January, calling out the “waste, fraud, and abuse” baked into the COVID-era subsidy structure. He is right, and he should act on it. Before Congress spends another dollar extending these subsidies, permanently or otherwise, it should require real-time income verification against IRS and wage data instead of the current system of self-attestation, end automatic re-enrollment for anyone whose circumstances may have changed, and give CMS the staff and the mandate to run the kind of fraud checks GAO just proved are trivially defeated. None of that requires resolving the broader argument over how generous subsidies ought to be. It only requires knowing who is actually receiving them.
I tell clients and courts the same thing every time I am asked to evaluate whether a fiduciary met their duty: good intentions do not substitute for verification. Every expert-witness case I have worked shares one trait once the losses surface. Somebody assumed the paperwork was accurate because nobody had a reason to check it. Congress has spent five years extending a subsidy program without ever building the verification infrastructure needed to know who is collecting it. Fix that first. Then have the debate about how generous America’s health subsidies should be. Skipping the audit to get to the argument faster is not compassion. It is malpractice, and taxpayers are the ones paying for it.
Jay Rogers is a financial professional with more than 30 years of experience in private equity, private credit, hedge funds, and wealth management. He has a Bachelor of Science in criminal justice from Northeastern University and has completed postgraduate studies at UCLA, the University of Pennsylvania, and Harvard. He writes about issues in finance, constitutional law, national security, human nature, and public policy.