    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                       FIGHTING OBAMACARE SUBSIDY FRAUD:
                      IS THE ADMINISTRATIVE PROCEDURE ACT
                             WORKING AS INTENDED?
    =======================================================================

                                 JOINT HEARING

                                   BEFORE THE

                           SUBCOMMITTEE ON OVERSIGHT

                                 JOINT WITH THE

                   SUBCOMMITTEE ON THE ADMINISTRATIVE STATE,
                        REGULATORY REFORM, AND ANTITRUST

                                     OF THE

                           COMMITTEE ON THE JUDICIARY

                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                          WEDNESDAY, DECEMBER 10, 2025

                                   __________

                               Serial No. 119-42

                                   __________

             Printed for the use of the Committee on the Judiciary

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                   Available via: http://judiciary.house.gov

                                   __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    62-276                  WASHINGTON : 2026
    -----------------------------------------------------------------------------------

                           COMMITTEE ON THE JUDICIARY

                            JIM JORDAN, Ohio, Chair

    DARRELL ISSA, California             JAMIE RASKIN, Maryland, Ranking
    ANDY BIGGS, Arizona                      Member
    TOM McCLINTOCK, California           JERROLD NADLER, New York
    THOMAS P. TIFFANY, Wisconsin         ZOE LOFGREN, California
    THOMAS MASSIE, Kentucky              STEVE COHEN, Tennessee
    CHIP ROY, Texas                      HENRY C. ``HANK'' JOHNSON, Jr.,
    SCOTT FITZGERALD, Wisconsin              Georgia
    BEN CLINE, Virginia                  ERIC SWALWELL, California
    LANCE GOODEN, Texas                  TED LIEU, California
    JEFFERSON VAN DREW, New Jersey       PRAMILA JAYAPAL, Washington
    TROY E. NEHLS, Texas                 J. LUIS CORREA, California
    BARRY MOORE, Alabama                 MARY GAY SCANLON, Pennsylvania
    KEVIN KILEY, California              JOE NEGUSE, Colorado
    HARRIET M. HAGEMAN, Wyoming          LUCY McBATH, Georgia
    LAUREL M. LEE, Florida               DEBORAH K. ROSS, North Carolina
    WESLEY HUNT, Texas                   BECCA BALINT, Vermont
    RUSSELL FRY, South Carolina          JESUS G. ``CHUY'' GARCIA, Illinois
    GLENN GROTHMAN, Wisconsin            SYDNEY KAMLAGER-DOVE, California
    BRAD KNOTT, North Carolina           JARED MOSKOWITZ, Florida
    MARK HARRIS, North Carolina          DANIEL S. GOLDMAN, New York
    ROBERT F. ONDER, Jr., Missouri       JASMINE CROCKETT, Texas
    DEREK SCHMIDT, Kansas
    BRANDON GILL, Texas
    MICHAEL BAUMGARTNER, Washington
                                     ------

                           SUBCOMMITTEE ON OVERSIGHT

                     JEFFERSON VAN DREW, New Jersey, Chair

    BARRY MOORE, Alabama                 JASMINE CROCKETT, Texas, Ranking
    ROBERT F. ONDER, Jr., Missouri           Member
    DEREK SCHMIDT, Kansas                JARED MOSKOWITZ, Florida
    BRANDON GILL, Texas                  HENRY C. ``HANK'' JOHNSON, Jr.,
                                             Georgia
                                     ------

                   SUBCOMMITTEE ON THE ADMINISTRATIVE STATE,
                        REGULATORY REFORM, AND ANTITRUST

                       SCOTT FITZGERALD, Wisconsin, Chair

    DARRELL ISSA, California             JERROLD NADLER, New York, Ranking
    BEN CLINE, Virginia                      Member
    LANCE GOODEN, Texas                  J. LUIS CORREA, California
    HARRIET HAGEMAN, Wyoming             BECCA BALINT, Vermont
    MARK HARRIS, North Carolina          JESUS G. ``CHUY'' GARCIA, Illinois
    DEREK SCHMIDT, Kansas                ZOE LOFGREN, California
    MICHAEL BAUMGARTNER, Washington      HENRY C. ``HANK'' JOHNSON, Jr.,
                                             Georgia

                   CHRISTOPHER HIXON, Majority Staff Director
                    ARTHUR EWENCZYK, Minority Staff Director

                               C O N T E N T S

                                  ----------

                          Wednesday, December 10, 2025
                               OPENING STATEMENTS

                                                                       Page
    The Honorable Jefferson Van Drew, Chair of the Subcommittee on
      Oversight from the State of New Jersey.........................     1
    The Honorable Jasmine Crockett, Ranking Member of the
      Subcommittee on Oversight from the State of Texas..............     4
    The Honorable Scott Fitzgerald, Wisconsin, Chair of the
      Subcommittee on the Administrative State, Regulatory Reform,
      and Antitrust..................................................     6
    The Honorable Jamie Raskin, Ranking Member of the Committee on
      the Judiciary from the State of Maryland.......................     7
    The Honorable Jim Jordan, Chair of the Committee on the Judiciary
      from the State of Ohio.........................................    10

                                   WITNESSES

    Seto J. Bagdoyan, Director of Audit Services, Forensic Audits &
      Investigative Service, Government Accountability Office
      Oral Testimony.................................................    12
      Prepared Testimony.............................................    14
    Dr. Brian C. Blase, President, Paragon Institute of Health
      Oral Testimony.................................................    50
      Prepared Testimony.............................................    52
    Dr. Ge Bai, Professor of Accounting, Johns Hopkins Carey Business
      School
      Oral Testimony.................................................    72
      Prepared Testimony.............................................    74
    Zack Cooper, Associate Professor of Public Health and Economics,
      Yale University
      Oral Testimony.................................................    85
      Prepared Testimony.............................................    87

              LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING

    All materials submitted for the record by the Subcommittee on
      Oversight and the Subcommittee on the Administrative State,
      Regulatory Reform, and Antitrust are listed below..............   114

    Materials submitted by the Honorable Jefferson Van Drew, Chair of
      the Subcommittee on Oversight from the State of New Jersey, for
      the record
        A report entitled, ``Patient Protection and Affordable Care
            Act: Preliminary Results from Ongoing Review Suggest
            Fraud Risks in the Advance Premium Tax Credit Persist,''
            Dec. 3, 2025, U.S. Government Accountability Office
        A press release entitled, ``President of Insurance Brokerage
            Firm and CEO of Marketing Company Convicted in $233M
            Affordable Care Act Enrollment Fraud Scheme,'' Nov. 17,
            2025, Office of Public Affairs, The Department of Justice
    An article entitled, ``The Great Obamacare Enrollment Fraud,''
      Jun. 2024, Paragon Health Institute, submitted by the Honorable
      Barry Moore, a Member of the Subcommittee on Oversight from the
      State of Alabama, for the record
    Materials submitted by the Honorable J. Luis Correa, a Member of
      the Committee on the Judiciary from the State of California,
      for the record
        An article entitled, ``Health Savings Accounts, Backed by
            GOP, Cover Fancy Saunas but Not Insurance Premiums,''
            Dec. 5, 2025, KFF Health News
        An article entitled, ``Why health savings accounts aren't the
            fix Republicans hope for,'' Nov. 25, 2025, The Washington
            Post
        An article entitled, ``Trump wants more health savings
            accounts. A catch: they can't pay insurance premiums,''
            Dec. 5, 2025, Fortune
        An article entitled, ``Fraud in Marketplace Enrollment and
            Eligibility: Five Things to Know,'' Jun 30, 2025, Kaiser
            Foundation
        A fact sheet entitled, ``Tell Congress: Don't make health
            insurance less affordable for 28,000 working Californians
            and their families in CA-46,'' Keep Americans Covered
        An article entitled, ``The expiration of the ACA's enhanced
            premium tax credits will devastate the small business
            community,'' 2025, Small Business Majority
    Materials submitted by the Honorable Jamie Raskin, Ranking Member
      of the Committee on the Judiciary from the State of Maryland,
      for the record
        An article enitled, ``Setting the Record Straight: Separating
            Fact from Fiction on Health Insurance Marketplace
            Fraud,'' Aug. 28, 2025, American Hospital Association
        An article entitled, ``$27,000 a Year for Health Insurance.
            How Can We Afford That?'' Dec. 10, 2025, The New York
            Times
        An article entitled, ``Health Savings Accounts: Robin Hood in
            Reverse,'' Apr. 15, 2024, Georgetown University

                       FIGHTING OBAMACARE SUBSIDY FRAUD:
            IS THE ADMINISTRATIVE PROCEDURE ACT WORKING AS INTENDED?

                                  ----------

                          Wednesday, December 10, 2025

                            House of Representatives

                           Subcommittee on Oversight

                   Subcommittee on the Administrative State,

                        Regulatory Reform, and Antitrust

                           Committee on the Judiciary

                                 Washington, DC

        The Subcommittees met, pursuant to notice, at 3:44 p.m., in
    Room 2141, Rayburn House Office Building, the Hon. Jefferson
    Van Drew [Chair of the Subcommittee] presiding.
        Present: Representatives Van Drew, Fitzgerald, Moore, Issa,
    Onder, Harris, Crockett, Correa, Moskowitz, Johnson, Balint,
    and Garcia.
        Mr. Van Drew. The Subcommittee will come to order. Without
    objection, the chair is authorized to declare a recess at any
    time.
        We welcome everyone to today's hearing. Thank you so much
    for being here. I know it's been a little unsettling, a little
    crazy in New Jersey vernacular, but it is what it is, and we do
    appreciate your time and your presence.
        I now recognize Dr. Onder to lead us in the pledge of
    allegiance. Then, I ask you to remain standing for a moment of
    silence.
        All. I pledge allegiance to the flag of the United States
    of America, and to the Republic for which it stands, one
    Nation, under God, indivisible, with liberty and justice for
    all.
        Mr. Van Drew. I will now recognize myself for an opening
    statement.
        Today this Committee examines a serious question that
    effects millions of average, everyday Americans every single
    day. As the Affordable Care Act as written and as implemented
    allowed waste, fraud and abuse to flourish, while real American
    families are left to struggle under a system that was supposed
    to protect them. This is about real people, real families in
    every district and every State in this great country.
        Good families who work hard, play by the rules and yet are
    still getting crushed by a system that was supposed to help and
    protect them. It's not fair. It's wrong. Frankly, it is
    disgusting.
        The people have done nothing wrong. The politicians have
    let them down. That is the real reason we're here. We're not
    here--and I almost feel like saying this, I hope I don't have
    to stay it over and over again, we are not here to debate what
    a new healthcare plan may look like. That is under another
    Committee's jurisdiction.
        We are not here to entertain scare tactics about stripping
    healthcare away. I really do believe no Republican wants to do
    that. Let me say up front to my colleagues on the other side,
    no one should pretend otherwise today. Today we are here to
    study it and look deep into and understand, particularly what
    my good friend the Chair of the Committee of the whole brought
    forward when he asked for a GAO investigation into this, the
    Government Accountability Office, totally nonpartisan.
        We shouldn't distract, we shouldn't dodge, and we shouldn't
    run from what this nonpartisan GAO investigation uncovered.
    Everytime someone tries to change the subject, it sends a
    message to the American people that defending the current
    corrupt ACA matters more than defending the families being hurt
    by it.
        The worst thing that we could do is pretend this system is
    working simply because people rely on it. We shouldn't pretend.
    Yes, people rely on it, but it's not good. People rely on it
    because they have no other choice very often. We're here to
    examine the failures of the system that exists right now and
    right here.
        Right now, the nonpartisan Government Accountability Office
    has revealed the ugly truth. They tested the ACA and the ACA
    failed. The GAO created fake applicants, get this, they created
    fake applicants using fictitious identity, missing documents
    and questionable personal information.
        The system approved them all anyway. These imaginary
    enrollees received tens of thousands of taxpayer dollars month
    after month, even though they didn't exist. No verified
    identity, no proof of citizenship and no income documentation.
    Nothing, nothing at all.
        Think about this, this was not a partisan Republican stunt.
    This was a nonpartisan Government Accountability Office, tens
    of thousands of your hard-earned tax dollars went sent to
    identities invented out of thin air.
        The fraud doesn't just waste tax dollars, it drives
    premiums higher for good, honest Americans. This is a program
    that paid out roughly $124 billion last year. That's a big
    number. If even a small fraction of that is tied to fraud or
    improper use, that is a huge number. We're talking about a real
    national crisis.
        Let me be clear and I want to be clear on this too, I'm not
    calling for the--me, personally, I am not calling for this
    entire system to be torn town overnight. That is not the
    question for us today. What we cannot do is make these
    subsidies permanent forever, because the system is also
    damaging American livelihoods and weakening their healthcare
    system.
        The real question is how we replace it, how we replace it
    and when we replace it in a responsible way that makes it safe
    for good Americans. Even with all the problems we have, we have
    to make it safe. We have to treat our American people properly.
        The American people are the victims of this corrupt
    structure; they deserve a bridge to hold them up while we build
    something much better. If a short-term extension--let me be
    blunt--is necessary, we should be clear about two things of the
    short-term extension: First, it is only to ensure families do
    not lose their healthcare in the immediate term.
        Second, the system is not sustainable and cannot serve as a
    long-term or permanent solution.
        Those two things we know. We have to take care of the here
    and now. We have to take care of them. We've got to do
    something short-term with it, but long-term we've got to do
    much, much better. Keeping it on autopilot with no reforms or
    accountability is purely negligent.
        When you look at the facts of this report, the depth of
    negligence becomes undeniable. The nonpartisan Government
    Accountability Office also found, and boy get all of this,
    there was no proper verification of income, eligibility, or
    accuracy in the payments. You couldn't make this stuff up.
        The GAO found Social Security numbers used to enroll
    multiple people into one account and they were all one family.
    They even found Social Security numbers that belonged to dead
    people--you can't make it up--that were being used.
        Think about it, we are letting criminals use dead Americans
    identities to scam living Americans out of their healthcare
    benefits. If a system cannot tell the dead from the living,
    then for sure it's failing and yet insurance companies get
    paid, whether the patient is real or fake, while the family who
    actually needs care is left fighting denials, delays, and
    rising premiums. That's the real world. This is a moral
    failure.
        Meanwhile, the Government Accountability Office found that
    hundreds of thousands of Americans are being switched into
    plans without their knowledge. Imagine a slick con man calling
    a vulnerable family and tricking them into it a plan they don't
    want, they don't need and actually hurts them. We have that. We
    have agents and we have them doing that as we speak. That is
    sad.
        It's horrible and it's cruel what these brokers and
    agents--not all of them, but these fake ones are doing. The
    truth is it isn't just random. The ACA structure has allowed an
    industry with dishonest brokers to profit from exploiting
    people's confusion and switching people into plans they never
    wanted and never asked for.
        Despite that fact, CMS received hundreds of thousands of
    complaints last year from people enrolled or moved without
    their very consent. The GAO also noticed that CMS has not
    updated its fraud risk assessment since 2018. It's simply
    unacceptable.
        Today we will hear from experts, thank you for being here.
    You studied how fraud spread through the marketplace. We will
    hear how insurers profited, while families struggled and were
    hurt. It has been great for insurance companies. Man, they have
    been making money hand over fist.
        We will assess whether the Administrative Procedure Act is
    even being applied in a way that prevents meaningful action
    against the waste, the fraud, and the abuse that have plagued
    this system.
        Our goal is straightforward here today. We must protect
    those who depend on coverage today. I get it. We must also hold
    accountable to those who exploited them and exploited the
    system.
        We must build a path forward that delivers affordable,
    accessible and accountable care for our American people,
    because the healthcare system cannot function when the rule of
    law is just optional, just optional for agencies, but somehow
    it's mandatory for patients.
        With that being said, I now recognize the Ranking Member,
    Ms. Crockett.
        Ms. Crockett. Thank you very much, Mr. Chair. I must tell
    you that as you spoke, my little pen got to going, as well as a
    couple of other people up here, because you said something to
    the effect of slick con man, calling and tricking people. I
    thought that was profound, because it seems like that's how we
    got into this mess, a slick con man has tried to convince
    people that healthcare should not be available to everyone.
        That's why right now there are millions of Americans that
    have no understanding of what will happen, they don't know if
    they are going to lose their health insurance or not. Frankly,
    after the big ugly bill was passed, we know that there's going
    to be a minimum of 17 million people that will lose their
    coverage. Let's talk about these subsidies because that's what
    we're here to talk about today.
        In a matter of days Americans across the country will
    either begin paying thousands of dollars more per month for
    health insurance or losing their coverage entirely. In fact,
    more than 350,000 people, all whom live in districts
    represented by Republicans on this Committee, will lose their
    coverage entirely.
        The 25,000 of Chair Jordan's constituents will lose
    coverage, 30,000 of Chair Van Drew's constituents will lose
    coverage, 20,000 of Chair Fitzgerald's constituents will lose
    coverage. They have the opportunity right now to sign the House
    Democrats discharge petition to force a vote to extend the
    Affordable Care Act tax subsidies for three years.
        I appreciate that the Chair said that he doesn't feel like
    it should be permanent. I appreciate that it sounds like the
    Chair also did not have a fix. What the Chair did not say is
    whether or not he would sign the discharge petition, which is
    only asking for an extension. Considering the fact that the
    last time I checked the House, the Senate, and the White House
    are run by Republicans, hopefully within the next three years
    they could actually find a plan. Nevertheless, I invite my
    colleagues on the other side of the aisle to do right, not by
    my constituents, but by their own.
        Instead, they've called this performative hearing to try to
    district the American people from what is about to hit them--
    the fact they have sold out their constituents because Donald
    Trump and their billionaire donors told them to do so.
        Their fake concern for fraud, waste, abuse, and their
    talking points on lowering the cost of living, well it's all
    B.S., every single bit of it. They gave these billionaires
    permanent tax cuts, and they are sacrificing the average
    American to pay for it. They canceled grants that schools were
    using to improve student outcomes.
        They stole resources that farmers in rural communities to
    expand local food systems. They took resources from preschool
    and early childhood education programs. They dismantled
    programs that helped tackle homelessness and assist seniors.
    They eliminated medical research grants that have helped
    thousands of people battling cancer and Alzheimers.
        They have done all of that but won't even help their
    constituents see a doctor, buy food, pay rent, or pay for
    childcare. They are OK with corporate socialism, but if you're
    a teacher, a police officer, a student, or a sanitation worker,
    if you are living paycheck to paycheck, if you can't afford
    childcare, if you can't pay your rent, if you can't feed your
    children, if you can't afford to pay for college, and if you're
    struggling with medical debt, well you're SOL in Trump's
    America.
        Congressional Republicans don't believe they have the
    responsibility to look out for their constituents; they have
    been a reckless rubber stamp for Donald Trump who doesn't even
    believe that there's an affordability crisis. In fact, he
    thinks affordability is quote, ``a hoax.'' While their
    constituents were lining up by the hundreds at food banks
    across the country, the President was literally mocking working
    class Americans at his Great Gatsby themed Halloween party.
        These people have shown us what they prioritize, and it
    isn't stopping fraud, waste, or abuse. In fact, President Trump
    has pardoned criminals who have stolen more than a billion
    dollars from Americans. The only thing they care about is
    making the rich richer at the expense of their own
    constituents.
        That's been Donald Trump's focus and congressional
    Republicans have gone along with it. This hearing is nothing
    more than another Republican attempt to dismantle the
    Affordable Care Act. It's performative to distract your
    attention away from the fact that they don't have a healthcare
    plan. Just concepts of one.
        I do want to make sure that I cover one other thing that
    the Chair spoke about. He specifically said that he's concerned
    about the fraud. He's not giving us numbers, but I can give you
    some numbers. If we're concerned about how much money it may be
    costing us because systems are not perfect, we have no perfect
    systems, we have always had some level of fraud in anything
    that we have because there's no such thing as perfection
    walking on this Earth.
        What I can tell you is that I seriously doubt--whatever
    level of fraud it is that the Chair is speaking of, I seriously
    doubt that it amounts to the over $200 million that the
    President is trying to line his pockets with of taxpayer
    dollars because he feels like he's been aggrieved. I can
    probably tell you that the $40 billion that he sent to
    Argentina, I'm sure that $40 billion is probably an amount that
    also is a lot larger than the alleged fraud that has taken
    place.
        If we are going to talk about being fiscally responsible,
    if we're going to talk about how we can keep people insured and
    how we can make sure that people are actually going to live to
    see another day. If it's really about the concern of fraud,
    then maybe rein in the person that is wasting money or deciding
    that taxpayers should just line his pockets to the tune of $200
    million.
        With that, I will yield.
        Mr. Van Drew. I thank the Ranking Member. Just to remind
    everybody, this hearing has is a great number of things we
    could debate. Love it, I love to do it. Maybe we will have some
    colloquies and debates in the future. We really want to focus
    on the problems with the ACA as it exists now. I will get you
    some numbers as well.
        With that being said, I will recognize the Chair of the
    Subcommittee on the Administrative State, Regulatory Reform,
    and Antitrust. Boy, you have got a long name for your
    Committee. Mr. Fitzgerald, for an opening statement.
        Mr. Fitzgerald. Thank you Chairman Van Drew. Thank you to
    our witnesses for being here today.
        Let me set the record straight, ObamaCare is a complete
    failure. We are a decade and a half into the so-called Patient
    Protection Affordable Care Act, a bill that was promised to the
    American people as a solution to lower healthcare spending.
    Patients have not been protected and healthcare has certainly
    not become more affordable.
        Since ObamaCare was fully implemented in 2014, healthcare
    premiums have risen 129 percent, over three times the rate of
    inflation during the same period. Additionally, premium
    subsidies have risen right along with the premiums.
        In 2014, subsidies cost the taxpayers $20 billion. In 2025,
    that number ballooned to $130 billion and $110 billion increase
    in 11 years. If patients and taxpayers have not benefited from
    Obama-Care, who has? Well, unfortunately, it is the large
    insurance companies.
        Since ObamaCare was signed into law, the weighted average
    of health insurers stock prices are up over 1,000 percent, far
    exceeding the S&P 500 during it that period. Even a smaller
    time period since the creation of enhanced premium tax credits
    in 2021, the Joint Economic Committee pointed out that both the
    Biden COVID premium subsidies do more to improve the financial
    outcomes of large health insurers than to reduce healthcare
    costs for Americans.
        The reality is Democrats created a boondoggle that has
    funneled billions of tax-payer dollars directly from the U.S.
    Treasury to large health insurance companies, while at the same
    time added hundreds of billions to our national debt, delivered
    few results for the American people, and drove premium and
    premium subsidy costs far beyond inflation.
        The Democrats demand that we keep injecting hundreds of
    billions of dollars into the very system they told us would
    make healthcare more affordable. Despite clear evidence, they
    are throwing more money at their failed system that is
    producing harmful results for Americans.
        Wisconsin commonsense will tell you that trying the same
    action over and over again while expecting a different result
    is insane. Aside from the insanity of Democrats position on
    extending ObamaCare premium subsidies, let's talk about the
    subsidy program integrity or the complete lack thereof. The
    enhanced subsidies have given rise to rampant fraud, as we'll
    hear from Mr. Bagdoyan, the GAO found significant instances of
    fraud in the premium tax credit program.
        The system allows insurance companies to effectively get
    away with stealing from the Treasury. The brokers are paid by
    insurance companies for each enrollment and are therefore
    incentivized to enroll as many people as possible. Whenever a
    person is enrolled or switches their plan, the health insurance
    company receives a subsidy, and the broker receives a kickback
    from the health insurance company. The GAO found that in 2023
    there were over 7,000 instances of an already deceased person
    enrolling in a subsidized health insurance plan.
        The GAO has also found in 2023 there were over 19,000
    instances of a dead person's Social Security number being used
    to enroll a living person in a subsidized health insurance. In
    total, for just one year the GAO found $21 billion in
    unreconciled subsidies. That number only includes citizens
    using Social Security numbers. It doesn't include noncitizens
    who received subsidized care.
        Independent research by the Paragon Health Institute
    estimates as many as 6.4 million enrollees miss represented
    their income to qualify for the full subsidized ObamaCare
    premiums. Paragon estimates the cost to taxpayers from this
    improper enrollment will exceed $27 billion in 2025 alone. This
    is not incidental. It is systematic risk to a program that has
    been ripe for abuse from day one. I'm sure our witnesses will
    elaborate further on that point.
        Thankfully, Republicans have taken action to combat this
    ObamaCare fraud. In H.R. 1, Republicans ensured only U.S.
    citizens could receive premium tax credits. We also removed the
    cap on repayments to the Federal Government for excessive
    subsidies and added stricter eligibility verifications to
    ensure people do not receive generous subsidies before their
    eligibility is determined.
        In June of this year the Trump Administration, the
    Department of Health and Human Services issued a rule meant to
    combat waste, fraud, and abuse in ObamaCare subsidies. The rule
    would have gone into effect on August 25, 2025, but a Biden-
    appointed Federal judge issued a stay that prevented most the
    fraud protection measures in the rule from going into effect.
        The judge's opinion was legally and factually ridiculous.
    The Trump Administration rule would have required individuals
    enrolled in fully subsidized plans to confirm their eligibility
    or pay $5, a $5 fee. This judge decided that this easily
    avoidable fee constituted an illegal premium.
        The judge also criticized Paragon data analysis and said
    the CBO study cited we're too old. We now know that the CBO's
    analysis is up to date, consistent across the history of
    ObamaCare and consistent with Paragon's analysis.
        In closing, let me just say that Republicans are committed
    to real reforms that would lower premiums and give patients
    more choice over their healthcare. Some of our witnesses are
    prepared to discuss solutions that could do just that.
        The ObamaCare as a whole, it's broken. After 15 years, it's
    broken. Despite generous taxpayer subsidies, it has not made
    healthcare more affordable, it has not shown evidence of a
    program that has any integrity and it has only further enriched
    large health insurance companies. It is truly the un-Affordable
    Care Act. Now is the time to wheel our healthcare system back
    into the operating room and perform surgery. Not continue
    putting billions of dollars and useless Band-Aids on a failed
    system.
        Thank you, Chair. I yield back.
        Mr. Onder. [Presiding.] I now recognize the Ranking Member
    of the Full Committee, Representative Raskin.
        Mr. Raskin. Thank you very much, Mr. Chair and thank you to
    all the witnesses for joining us today.
        In three weeks, the ACA's tax credits expire. We've got a
    simple choice in Congress, we can give millions of American
    families more affordable health insurance by extending the ACA
    tax credits or we can force on them drastic premium increases,
    that's the choice. Any other rhetorical exercise today is a
    diversion and a distraction.
        My colleagues want us to change the subject. They want to
    talk about the problem of fraud, the perennial problem of
    fraud. There are lots of things we can say about that and maybe
    we can make some progress on it, but that's a completely
    different issue.
        Fifteen years can ago, the ACA passed and this historic
    achievement gave millions of Americans who had been priced out
    of healthcare access actual access to health insurance into it
    lifesaving medical care. With the enhanced premium tax credits
    passed by Democrats, coverage became more affordable for tens
    of millions of people who did not have access to healthcare,
    but now President Trump and our colleagues want to turn the
    hands of the clock back, they want to make health insurance
    more expensive for the American people.
        They want to allow tax credits for health insurance to
    expire. They have a solution to the affordability crisis in
    America which they call a con job and a Democrat hoax for which
    hundreds of millions of Americans live with every day. Their
    solution is to increase health insurance premiums for 22
    million Americans by 75 percent on average.
        For many Americans their monthly premium payments are
    doubling or tripling. A 60-year-old in my district who makes
    $82,000 a year will see their premium increase jump from $581-
    $1,552, a stunning 167 percent increase. A person making the
    same salary in our distinguished Chair Jordan's district will
    see a 248 percent jump in insurance rates with a monthly
    premium increasing from $581-$2,022.
        Thanks to the Kaiser Family Foundation for breaking these
    down according to congressional districts so Members of
    Congress can understand what's about to happen to our own
    people.
        Well, our people are looking at working with no health
    insurance, sending their kids to school with no health
    insurance, trying to avoid getting the measles under the
    leadership of Secretary Kennedy at HHS with no health
    insurance. Our colleagues just say, let them pack the emergency
    rooms, let them take two conspiracy theories and call me in the
    morning.
        We talk about healthcare for Americans and they change the
    subject to talk about fraud. That's an old trick. When we talk
    about Social Security, they talk about fraud. When we talk
    about Medicare, they talk about fraud. When we talk about
    Medicaid, they talk about fraud.
        All because they oppose these programs for the people, not
    the fraudulent parts created by criminals who we need to chase
    down and prosecute, but rather the fairness parts created by
    Congress for the American people. Now, we talk about extending
    health insurance and they want to talk about fraud.
        Well, why does President Trump have any standing to lecture
    anyone about fraud? Think about that for a second. He was
    criminally convicted by a unanimous juries of his peers on 34
    different felony counts of falsifying business records to
    conceal illegal payments he made. He was found guilty of
    defrauding the State of New York by lying about real estate
    values and he owes hundreds of millions of dollars in ill-
    gotten gains to the people of New York. Now, he wants to
    distract us from their sweeping attack on the healthcare rights
    the of the people by claiming to be enemies of fraud. What a
    joke.
        The President just used his pardon power to commute the
    sentence and forgive the fines of a guy, a fellow criminal
    convict who defrauded the government of $1 billion by
    exploiting nursing homes and other senior care healthcare
    facilities. One of the biggest frauds ever committed in the
    history of the United States he pardoned more than a dozen
    criminals who stole hundreds of millions of dollars from
    Medicare and Medicaid for the American people. He pardoned
    criminals who abused elderly patients and subjected them to
    unnecessary treatment that were described by the prosecutors in
    those cases as horrific and barbarian.
        If anyone wants to challenge me on any of these facts, I
    will read to you from the cases. I will give you the
    documentation. You might prefer not to look at who Donald Trump
    is pardoning but that does not mean it's not happening.
        Not only did he free unrepentant incorrigible fraudsters
    over the last 11 months, but he also relieved them of their
    fines and the restitution that they owed to pay their victims.
    A total right now of more than $1.3 billion and running. Before
    Trump, all the Presidents had made the people actually payoff
    their fines and their restitution, but not this President.
        A few weeks ago, he pardoned the former president of
    Honduras, Oscar Hernandez who brought in, check this out, 400
    tons which translates to 800,000 pounds of cocaine, billions of
    individual doses of cocaine into our country to quote, as the
    President of Honduras said, ``to shove up the noses of the
    gringos,'' as he so sweetly put it. In our alleged American
    first President pardoned this sick, fascist, anti-gringo, drug
    dealer while his war secretary was blowing alleged drug boats
    and killing 84 people with no declaration of war by Congress
    and no due process, all allegedly in the name of stopping
    drugs. What a joke.
        The President pardoned Ross Ulbricht, the mastermind behind
    the dark web platform Silk Road that was used by drug dealers
    to sell $214 million worth of narcotics. That guy was sentenced
    to life in prison with no chance of parole. Yet, after Trump
    pardoned him on day one of his administration, this guy is now
    back at work, a completely unrepentant criminal and a threat to
    public safety.
        We are being lectured by newly minted antifraud fighters,
    who utter not a word about any of these pardons of drug
    traffickers and organized criminals, but people who said
    nothing when President Trump illegally sat 17 inspectors
    general in our government, the very people who were tasked with
    rooting out fraud, abuse and corruption in our government.
        In 2024, they saved $71 billion alone. They have been
    sacked and either not replaced or replaced with a bunch of
    political hacks. Ten million Americans have already lost their
    health insurance because of this obscene ugly bill. A new CMS
    rule will rip care from 1.8 million Americans. Their plan to
    kill the ACA tax credit would mean another four million
    American families will no longer have health insurance.
        Fraud is a criminally wrong and a serious threat to the
    well-being of our people. No one is doing more to stop it than
    the Democrats who built these programs that the fraudsters are
    going to jail for ripping off for being pardoned by the
    convicted fraudster President.
        Every dollar stolen is a threat to the infrastructure of
    our safety net. Yes HHS, the Centers for Medicare and Medicaid
    Services DOJ must do a lot more to fight it. We must all fight,
    not pardon and exonerate the criminals and fraudsters who steal
    from the American people.
        The way to fight fraud is with targeted antifraud measures
    not to destroy the public programs that actually serve the
    American people. They want to get rid of healthcare that we
    want to protect, and we want to get rid of the fraudsters that
    they want to pardon done. Choose your side.
        I yield back to you, Mr. Chair.
        Mr. Van Drew. [Presiding.] I thank the Ranking Member.
        I would like to submit with unanimous consent an article to
    go into the record. The article is titled, ``Patient Protection
    and Affordable Care Act Preliminary Results,'' and it just
    details the Ranking Member asked for numbers, 19,000 in
    instances of a dead person's Social Security number being used,
    160,000 applications in plan year 2024 that had unauthorized
    changes though brokers, 66,000 Social Security numbers in 2024
    that were used for over 365 days illegally. I could go on and
    on with the numbers of course, but I'd like to submit that.
        I'd also like to say again, I want to remind everybody that
    this hearing is about the Affordable Care Act. If you think
    it's perfect, if you think there's no fraud, if you think that
    the Government Accountability Office is lying, then you should
    say so. I hope that everyone on the other side of the aisle has
    read this report from one end to the other. It is a nonpartisan
    report. It's not a Republican report.
        With that, I recognize the Chair of the Full Committee, Mr.
    Jordan.
        Chair Jordan. Thank you, Mr. Chair.
        If you like your plan, you can keep your plan. If you like
    your doctor, you can keep your doctor and premiums will go
    down. That's what the Democrats told us when they started this
    thing. They were zero for three. Now, they are telling us oh,
    the cliff that they created, which is going to happen in 21
    days, if we don't extend the subsidies, the whole world is
    going to end. Subsidies increase costs, choice in competition
    lower costs. Subsidies drive up premiums, choice in competition
    lower premiums. No, no, no, they just want to keep doing the
    same thing.
        Now, I understand there is a cliff coming and we should
    address that, but we should address it in the contact of
    actually doing something that brings down premiums for all
    Americans. I think they said 12 million, 22 million, different
    numbers. Well, there are 340 million and some people in this
    country that got to deal with healthcare. We would like the
    premiums to come down for families across the Nation.
        Then they said I think the Ranking Member of the
    Subcommittee, the Senator from Texas said, ``there's always
    some level of fraud.'' I think the Ranking Member of the Full
    Committee is talking about perennial fraud, as if it's OK.
        Have they read the report? A $21 billion in unreconciled
    subsidies were paid to insurance companies in one year, 7,000
    times dead people enrolled, that's a miracle, holy cow. The
    19,000 instances of a dead person's Social Security number
    being used to enroll someone who's alive. That's crazy too. One
    time a Social Security number was used to enroll in 125
    policies, different policies in one year, that's phenomenal.
    That's just perennial. That's just your run of the mill, garden
    variety fraud I guess, according to the Democrats.
        We didn't think that's the case. We would like to have
    healthcare where there is choice in competition, where you
    don't have this kind of fraud, and you don't have these endless
    subsidies going on forever so that premiums actually come down
    for American families. I look forward to hearing from our
    witnesses to talk about those things that will make a
    difference for the families we all get the privilege of
    representing. I yield back.
        Mr. Onder. [Presiding.] Without objection, all other
    opening statements will be included in the record.
        We will now introduce today's witnesses.
        Mr. Seto Bagdoyan is a Director of audit services in the
    Government Accountability Office, Forensic Audits and
    Investigative Service Division. In FAIS he leads audits of
    major Federal programs focusing on program integrity and risk
    management issues.
        Dr. Brian Blase is the Founder and President of Paragon
    Health Institute, a nonprofit organization that works to
    improve public and private health. He previously served as
    Special Assistant to the President for economic policy on the
    White House's National Economic Council.
        Dr. Ge Bai. Dr. Bay is a Professor of Accounting at the
    Johns Hopkins Carey Business School, and Professor of Health
    Policy and Management at the Johns Hopkins Bloomberg School of
    Public Health. Her research focuses on healthcare accounting,
    finance, and policy.
        Professor Zack Cooper. Mr. Cooper is an Associate Professor
    of Public Health and an Associate Professor of Economics at
    Yale University. His research focuses on healthcare spending
    and competition in the hospital and insurance markets.
        We will begin by swearing you in. Would you please rise and
    raise your right hand?
        Do you swear or affirm under penalty of perjury that the
    testimony you are about to give is true and correct to the best
    of your knowledge, information and belief so help you God.
        Mr. Van Drew. Let the record reflect the witnesses have
    answered in the affirmative. Please know that your written
    testimony will be entered into the record in its entirety.
    Accordingly, we ask you to summarize your testimony in five
    minutes.
        Mr. Bagdoyan, you may begin.

                       STATEMENT OF SETO BAGDOYAN

        Mr. Bagdoyan. Thank you, Mr. Chair, Chair Fitzgerald, Chair
    Jordan, Ranking Member Crockett, and Ranking Member Raskin, I'm
    pleased to highlight today initial results of selected aspects
    from our ongoing review of the ACA APTC program, a program's
    complex structure, high levels of participation spending and
    generally weak controls underlie its inherent risks for fraud.
    This regard APTC spending totaled $124 billion in 2024, making
    it highly attractive to fraudsters.
        To be clear, our review focuses on identifying indicators
    of potential fraud. This is very important to understand today,
    in ACA rather than determining the extent of fraud or
    evaluating its policy or viability aspects. Overall, our
    current bottom line is threefold, initial results are
    consistent with those from similar work over 11 years ago.
        Risk conditions haven't improved over that time, in fact
    risks persist and could be significant. The program faces two
    principle risks, integrity risk from ineligible and eligible
    applicants perpetrating enrollment or subsidy fraud and
    consumer harm risk from brokers and agents taking unauthorized
    actions, jeopardizing health coverage.
        More specifically, three principled points were worth
    noting. First, CM's approach to addressing ACA's fraud risk is
    short on fundamentals. For example, its capacity to manage risk
    is weak, including a generally lenient posture regarding
    controls, obsolete and incomplete fraud risk assessments, the
    latest dates from 2018 and no comprehensive strategy to
    proactively counter risk.
        Capacity hasn't kept up with significant program changes,
    including growth and enrollees and spending, frequent shifts in
    enrollment controls and the expanding role of brokers and
    agents in facilitating enrollment.
        Second, covert testing of enrollment controls indicates
    that weakness is from similar testing over 11 years ago
    persist. The 18 of 20 of our ghost applicants using fake
    information and documents secured ongoing coverage and
    subsidies totaling $10,000 a month, while many application-
    related discrepancies remain unresolved.
        Third, extensive data analyses flagged multiple indicators
    of potential fraud. For example, the overuse of SSNs. Multiple
    policies attached to a single number. The 66,000 instances
    occurred in 2024, with over 194,000 policies attached to those.
    That is twice two the 2023 level.
        The most overused SSN from 2023 has 127 full year and part
    year policies attached with annualized subsidies totaling
    $5,767. Matches with SSAs full death file, deceased individuals
    associated with active policies of 58,000 matches in 2023, and
    partial results show 26,000 subsidies, carry subsidies totaling
    $94 million.
        No initial evidence of reconciliation of subsidies, Social
    Security gaps between pertinent enrollment and tax data
    suggests that APTCs totaling $21 billion in 2023 were
    potentially not reconciled as required. This represents 32
    percent of all APTCs where applicants included in SSNs and
    about 23 percent of total APTC spending in 2023.
        Also, a potentially unauthorized broker agent activity or
    as we call it volleying, this involves changes to brokers and
    agents of record or insurance plans or new coverage initiated,
    all without consumer knowledge or consent. There were 160,000
    instances in 2024, that is five times the 2023 level.
        Unauthorized changes jeopardize coverage and could result
    in consumer harm. For example, curtailed access to providers or
    medications.
        In closing, initial results show ACA's risks persist,
    undermining program integrity and jeopardizing consumers.
    However, CMS has not acted decisively and timely to counter
    them. CMS must acknowledge risks exist and are immediately to
    take them seriously and bolster its capacity to address them.
        This concludes my opening remarks. Thank you.
        [The prepared statement of Mr. Bagdoyan follows:]
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        Mr. Onder. Thank you, Dr. Bagdoyan. Mr. Blaze.

                      STATEMENT OF DR. BRIAN BLASE

        Dr. Blase. Mr. Chair, Chair Fitzgerald, Chair Jordan,
    Ranking Members Crockett and Raskin, and the Members of the
    Committee. Thank you for the opportunity to testify this
    afternoon.
        The failures of the Affordable Care Act are well-known,
    canceled health plans, soaring premiums and deductibles, lost
    doctors and narrow networks. The law entrenched in inefficient
    insurance dominated health sector by sending massive subsidies
    straight to insurance companies.
        A new Joint Economic Committee report found that the main
    winners of the ACA subsidies are health insurers whose stock
    prices have soared. My testimony today will focus on one
    profound and expanding failure, massive fraud and abuse in the
    exchanges. The GAO's work shows how vulnerable the program is
    to fraud, with 96 percent of fake applications enrolled in
    subsidized coverage. Paragon's work shows the staggering cost.
    Our research grew out of a single conversation.
        In May 2024, I testified in Texas, a State Senator asked me
    about techniques being used to inappropriately enroll people in
    fully subsidized ACA plans. I responded that there were large
    incentives for abuse, but that I did not know the scale. On
    returning, I asked my team to do a simple analysis, compare the
    number of people enrolled claiming income between 100-150
    percent of the poverty level to the number of people who would
    be eligible for a plan with that income.
        Under a COVID-era subsidy boost, the ones set to expire
    after this year, coverage was made fully subsidized for people
    who claimed income in that category. Using conservative
    assumptions, we found five million more people enrolled in that
    income category than were eligible in 2024. Nearly half of all
    enrollees claimed income in this narrow band. More than half of
    them were not eligible.
        In 2024, Federal spending on ineligible enrollees likely
    exceeded $20 billion. We published our findings in a paper
    entitled, ``The Great ObamaCare Enrollment Fraud.'' Others
    replicated Paragon's work and they got the same result.
    Exchange enrollment had surged in large part because
    eligibility rules were ignored. Improper and phantom enrollment
    took off.
        After ignoring the problem for two years, the Biden
    Administration's actions to penalize some brokers were too
    little, too late. As proof of their failure, improper
    enrollment surged in the last enrollment period on President
    Biden's watch. After open enrollment in 2025, there were 6.4
    million people enrolled in fully subsidized plans and were not
    no eligible at a cost of $27 billion. Many enrollees were
    victims, signed up without their knowledge. Some lost plans
    they liked, and others now face tax penalties.
        One customer service agent said that half of people signed
    up had no idea that they were enrolling in health insurance. A
    new study from the Competitive Enterprise Institute, shows two
    times more people enrolled in exchange plans than report being
    enrolled in those plans. Automatic reenrollment has simply
    shuffled improper eligibility determinations from one year to
    the next.
        In 2025, 45 percent of all exchange enrollees took no
    action and were automatically reenrolled. Given widespread and
    proper enrollment, many enrollees unaware of their coverage we
    would expect many to never use their plan. The Biden
    Administration didn't release information on zero claim
    enrollees. Fortunately, in August, the Trump Administration
    did. What did we find? A surge in enrollees had who never used
    their plan, no doctor visit, no prescription, and no lab work.
        In 2024, nearly 12 million enrollees did not use their plan
    a single time, up from fewer from four million in 2021.
    Overall, 35 percent of all exchange enrollees never used their
    plan and 40 percent of fully subsidized enrollees did not have
    a single plan. Zero claim exchange enrollees are more than
    double what occurs in a normal health insurance market and are
    double the rates before the COVID-era subsidy expansion. There
    are unquestionably millions of phantom enrollees in the
    exchanges. Federal taxpayers sent more than $35 billion to
    insurers in 2024 for people who never used their plan.
        This one Big Beautiful Bill took some important steps to
    improve exchange program integrity. The best way to reduce the
    fraud and waste is for the COVID-era subsidy boost to expire as
    scheduled. That would still leave in place extremely generous
    subsidies. It would cover the vast majority of premiums and
    grow more generous over time on autopilot.
        Thank you. I look forward to answering your questions.
        [The prepared statement of Mr. Blase follows:]
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        Mr. Van Drew. [Presiding.] Thank you very much and now we
    will move on to Dr. Bai.

                        STATEMENT OF DR. GE BAI

        Dr. Bai. Chair, Ranking Members, and the Members of the
    Subcommittees, thank you for the honor of testifying. My views
    do not represent Johns Hopkins or its affiliates.
        First, in a study soon to be published in JAMA Health
    Forum, my colleagues and I found that from 2014-2023, a 10-year
    period, ObamaCare premium subsidies grew from under $20
    billion-$83 billion. This year it is going to be $130 billion.
        Second, for subsidized plans the taxpayers' share rose from
    29 percent--74 percent.
        Third, unsubsidized plans lost appeal. Their marketshare
    shrank about a quarter. Taxpayers spent hundreds of billions of
    dollars on ObamaCare subsidies, but did the money go to the
    right place? GAO, DOJ, Paragon institute, and others have found
    the answer is no.
        What they found is actually only a tip of the iceberg.
    Fraud is like cockroach infestation. Once we see one, there are
    more.
        Subsidy fraud happened because government agencies have
    little incentive to care when they spends taxpayer money. The
    insurers and the brokers have no incentive to stop it. As we
    discuss subsidy, we should always remember the root of the
    problem is the unaffordable, low-value ObamaCare itself. It was
    originally sold to American people as affordable.
        President Obama promised premiums would go down by $2,500.
    At that time, many economists already predicted unaffordability
    as we are experiencing today.
        Soon numerous regulations to ObamaCare damaged both the
    provider market and the insurance market. Consolidation,
    stagnation, high prices and high premiums follow. Some people
    blame private companies, but the private companies are merely
    responding to the very incentives created by ObamaCare. Others
    blame FTC for consolidation, but by the time merger acquisition
    transactions reach FTC, it's already too late. ObamaCare has
    made the soil so toxic that only large entities can survive.
    That is why ObamaCare is both a taxpayer fraud and a consumer
    deception.
        The COVID-era enhanced subsidy used the taxpayers to lure
    higher income consumers LOEs into unaffordable plans that they
    would not have bought otherwise without addressing any
    underlying unaffordability. Also, set them up as political
    pawns for another future premium cliff. This is also consumer
    deception and taxpayer fraud.
        The ObamaCare defrauds taxpayers three times. First, paying
    for expensive premium subsidies. Second, paying those
    fraudsters. Third, paying a high price in premiums for their
    own healthcare caused by ObamaCare. Except for a small number
    of people who benefited critically and financially from
    ObamaCare all Americans lose.
        Patients are deprived of affordability and excess that a
    free market could have brought. Physicians, entrepreneurs
    innovators, and American workers can reach their productivity
    potential. Our employment, the economy and global leadership
    suffered.
        ObamaCare fraud was created by Congress and can only be
    fixed by Congress.
        First, open the book and let the public help detect and
    deter subsidy fraud.
        Second, most importantly, invigorate healthcare markets,
    let the patient control their healthcare dollars. Let providers
    compete and level the playing field. Let the insurers then
    offer plans that consumers actually want and deregulate and
    unburden--hundreds and millions of Americans want better health
    and a lower price, confidence builders want to compete,
    innovate, and earn returns. Their hands are tied by ObamaCare.
        Member of Congress please unleash American dynamism into
    healthcare and bring true access and affordability to all.
    Thank you.
        [The prepared statement of Ms. Bai follows:]
       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Van Drew. Dr. Bai, thank you. Next, we will ask
    Professor Cooper. Thank you for being here.

                        STATEMENT OF ZACH COOPER

        Mr. Cooper. Thank you. Good afternoon, Chair Jordan, Chair
    Van Drew, Chair Fitzgerald, Ranking Member Raskin, and the
    Members of the Committee. My name is Zack Cooper. I am a health
    economist and Professor at Yale University, where my reach
    focuses on the understanding the drivers of healthcare spending
    growth in the United States and how healthcare spending impacts
    the wider economy.
        Today I'm testifying here on my own behalf, not on behalf
    of Yale University and the views I am going to express are my
    own. I really appreciate the opportunity to be here.
        A decade ago in my health economics class, when I taught my
    students about the relationship between health insurance,
    health and mortality, what I told them was health insurance is
    a fundamentally a financial tool. I was wrong. A decade later,
    my views have changed because the research has changed. The
    clearest evidence we have now is that enrolling an American in
    a Affordable Care Act plan on the exchanges make them less
    likely to die.
        The enhanced ACA subsidies that help approximately 22
    million people in this country's purchase plans are set to
    expire at the end of year. People getting health insurance on
    the exchanges are farmers, they are ranchers, they are cooks in
    small restaurants, they are contractors who run their own
    businesses. If those subsidies end, the premiums people pay are
    going to skyrocket and approximately four million people are
    going to lose their coverage. Extending those subsidies
    matters.
        If you focus only on whether the subsidies remain in place,
    we're having the wrong conversation. The real problem we're
    facing in this country is the underlying cost of healthcare.
    The growth in healthcare spending is what makes the subsidies
    necessary in the first place. It's driving up premiums for
    employer sponsored health insurance coverage; it is driving up
    premiums on the exchanges.
        Rising healthcare spending is crushing families, it's
    slowing wage growth, and it is reducing employment for
    Americans earning less than $100,000 a year who are working
    outside the healthcare sector. As I've said, healthcare
    spending is literally crushing the American Dream.
        Next year premiums from employer sponsored plans are
    expected to increase 10 percent, premiums on the exchanges are
    projected to rise 18 percent. The premiums growth is largely
    driven by the growth we're seeing at hospital and provider
    prices. I want you to think of mergers, staffing shortages, and
    tariffs on medical devices. Then, there is the increasing use
    of GLP-1s.
        As the Congressional Budget Office has said, the exchange
    plans are seeing a sharper increase in premiums in the employer
    plans precisely because of the uncertainty over the expiration
    of the ACA subsidies. Insurers had to factor in the risk that
    if the subsidies expired, healthier people would be less likely
    to buy insurance on the exchanges, which could lead to sicker
    insurance risk pool.
        Price growth is the biggest problem we're facing. Over the
    last two decades, prices in the hospital sector as an example
    have grown faster than prices in virtually any other sector of
    the U.S. economy. We've seen huge numbers of hospital mergers,
    mergers of hospitals and physician practices, mergers of
    pharmacy benefits managers. This is what the problem is that
    we're facing. There are practical steps Congress could take to
    address this.
        The first is introducing so-called site neutral billing.
    Medicare often pays more, sometimes double the identical
    services when they are delivered in a hospital versus an
    independent physician's office. This encourages content
    consolidation, it raises prices, and it drives up premiums.
        The second is increasing funding for antitrust enforcement.
    Increasing enforcement budgets turns out to be cost effective
    for the Federal Government. It makes a difference.
        Finally, we need to begin serious exploration of larger
    healthcare reforms, they could be implemented over the next
    decade. During the shutdown, one idea briefly surfaced was a
    bipartisan commission to study ways to lower healthcare
    spending in this country. That commission shouldn't be a
    footnote, its' essential, healthcare costs are crushing your
    constituents.
        Now, a brief word on fraud, as the GAO report makes clear,
    there is a fraud risk on the exchanges. In 2024, CMS took
    action to spend 850 agents and brokers from the federally run
    marketplaces because they had a reasonable suspicion of fraud.
        We shouldn't tolerate fraud. We should work tirelessly to
    stop it. However, my review or my reading of the literature is
    that fraud is not the primary driver of the growth we're seeing
    right now in healthcare spending. What's really driving premium
    growth is growth in healthcare providers' prices.
        We as a country have failed to take the necessary steps to
    make healthcare affordable for people in this Nation. My
    insurance is good. I'm going to assume that most of the folks
    in this room have pretty good insurance coverage.
        The reason that subsidies are important is because lower-
    and middle-class, lower- and middle-income Americans shouldn't
    be left uninsured or stuck paying astronomical premiums because
    policymakers, healthcare purchasers like employers have failed
    to make the tough choices that need to be made to rein in
    healthcare cost in this country.
        Subsidies alone aren't a solution. What they do is buy us
    time. The point is to use the time that they provide to build a
    system where coverage is affordable because care is affordable.
    I'm delighted to talk about the steps we could take as a
    country to make healthcare more affordable.
        Thanks for the opportunity to testify, and I look forward
    to your questions.
        [The prepared statement of Mr. Cooper follows:]
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        Mr. Van Drew. [Presiding.] I thank the gentleman. I am now
    going to recognize the Ranking Member for his statement.
        Ladies and gentlemen, I want to apologize a little bit. We
    cannot control what happens on the floor. Things took much
    longer today. We're going to have another voting session.
        We are going to attempt to have two people, to be as fair
    as we can, on either side of the aisle speak, and that's going
    to wrap the hearing up. Otherwise, we'd have to come back, and
    everybody has previous commitments.
        Please accept my apology in advance to Members on both
    sides of the aisle and to the witnesses. I am truly sorry about
    this. I was looking forward to a robust, thorough, full-
    throated debate on this. I really was. It didn't happen.
        The gentleman from Maryland.
        Mr. Raskin. Mr. Chair, thank you very much.
        Professor Cooper, let me just pick up with what you just
    said. You testified that it was actually growth in healthcare
    prices and insurance prices that is really driving the cost
    increases, not so much fraud, but then you mentioned that there
    were 850 insurance agents and brokers who were suspected of
    fraud, waste, and abuse who had been removed by the Biden
    Administration.
        Then, this is somewhat of a bombshell, tucked in the GAO
    report--all 850 of those shady insurance agents and brokers
    accused of fraud were allowed back into the marketplace that
    they were suspected of defrauding.
        Did I hear that right?
        Mr. Cooper. That's my understanding, yes.
        Mr. Raskin. Well, I know you don't think fraud is the big
    deal here, but that can't be a sound practice, can it be, to
    have the Trump Administration restoring potentially fraudulent
    brokers and agents to the government, to the program?
        Mr. Cooper. If your goal, Congressman Raskin, is to reduce
    fraud, that's not what I would do.
        Mr. Raskin. Mr. Bagdoyan, let me come to you. You identify
    in your report potential risks for fraud in the ACA program.
    Just to be clear, are those kinds of potential risks you
    identified unique to the ACA program or are those potentially
    present in all healthcare programs or all government programs?
        Mr. Bagdoyan. That's a great question. Thank you for asking
    it.
        The indicators for identity proofing and eligibility
    determination, those are the key ones that pretty much run the
    gamut of any kind of a--
        Mr. Raskin. If I could, and just to followup on that, this
    also is not something new that's taking place now or was not
    new in the last administration.
        You identified that that potential risk of fraud went back
    to 2014, right?
        Mr. Bagdoyan. That's when we first started this work, sir,
    yes.
        Mr. Raskin. OK. It seems to me that really this hearing
    should be about what is the administration doing to confront
    this risk of abuse that has been in place for more than a
    decade.
        Can anybody answer what Secretary Robert F. Kennedy, Jr.,
    at HHS and men mutt Oz are actually doing about the potential
    kinds of fraud that go back to 2014? I don't know.
        Dr. Blase, can you answer that?
        Dr. Blase. Thank you for that question, Congressman.
        The administration made a final rule on exchange program
    integrity that included a lot of policies that would reduce the
    fraud.
        One of them was to have a $5 minimum payment to review
    people's eligibility prior to continuing enrollment to address
    issues with auto-reenrollment. That rule was stayed by one
    judge so it wasn't in effect.
        The reconciliation bill actually has three important
    provisions to address some of the fraud. It will require
    enrollees starting in 2028 to take action prior to being auto-
    reenrolled. The insurer won't be able to just keep them in the
    plan. The enrollee will have to do something.
        Mr. Raskin. Yes.
        Dr. Blase. It addresses--the Biden Administration opened up
    enrollment for anyone claiming income in a certain category at
    any point in the year. The GAO report showed just how
    vulnerable the exchanges were. It's called the special
    enrollment period--significantly opened up the opportunity for
    fraud.
        Mr. Raskin. Let me just stop you because I'm running out of
    time here.
        The United States District Court in Maryland struck down
    that rule, stayed enforcement of that rule, as I understand it,
    right? That was based on the report that you prepared. Is that
    the Paragon Report? Am I getting that right?
        Dr. Blase. No. There were commentators that cited the
    Paragon Report. The judge in his decision said that CMS didn't
    do an adequate explanation of describing the policy. There was
    also another judge in a Massachusetts Court that looked at the
    same issue and threw out the challenge.
        Mr. Raskin. Here's what the Court said, this is not really
    my field, but it said:

            Defendants are not free to support a rule change with data of
            questionable validity and limited relevance and then refuse to
            engage with commenters' reasonable concerns if the data fails
            to support the conclusion the agency drew from the data.

    The Court essentially rejected the underlying methodology and
    the data that was collected.
        Dr. Blase. Well, the Court didn't look at the Paragon
    Report. The court looked at the commentators that wrote about
    the Paragon Report.
        I can tell you, Congressman, CBO has cited that report in
    their work. CBO has estimated improper enrollment in the
    exchange, and CBO's estimates are consistent with what Paragon
    predicts.
        Mr. Raskin. OK. Well, thank you for that. I just hope that
    the administration will take the problem of fraud and abuse
    seriously and work on it because the tools exist now.
        Thank you for your patience, Mr. Chair, and I yield back to
    you.
        Mr. Van Drew. I thank the Ranking Member. I'm just going to
    ask a couple of questions quickly, because I want a couple
    other Members to be able to speak. Really quick to all of you,
    is the GAO a nonpartisan organization? Mr. Bagdoyan?
        Mr. Bagdoyan. Absolutely.
        Mr. Van Drew. Dr. Blase?
        Dr. Blase. Yes.
        Mr. Van Drew. Nonpartisan.
        Dr. Blase. Yes.
        Mr. Van Drew. It's not a Republican organization.
        Dr. Bai? Dr. Bai?
        Ms. Bai. Yes.
        Mr. Van Drew. Yes? OK, thank you. Professor Cooper?
        Mr. Cooper. Yes.
        Mr. Van Drew. OK, thank you.
        Did the GAO--Dr. Blase, I'll ask you this question--say
    that dead people are receiving benefits?
        Dr. Blase. They did.
        Mr. Van Drew. Did the GAO say that fraudsters, brokers, and
    agents were misusing the system, getting benefits themselves
    and moving people into plans they don't want?
        Dr. Blase. Yes. The GAO report showed significant
    vulnerabili-
    ties with the exchange.
        Mr. Van Drew. Did the GAO show, nonpartisan, that money was
    going to Social Security numbers, not families, to multiple
    numbers of Social Security numbers from multiple individuals,
    and they were receiving subsidies and it couldn't be possible?
        Dr. Blase. Yes. Tens of thousands.
        Mr. Van Drew. Tens of thousands.
        Dr. Blase. Yes.
        Mr. Van Drew. OK. That's my first point and the point I
    wanted to make as well. I think that we have--you say--can you
    please--
        Mr. Moore. Yes, Mr. Chair. I'd like to submit for unanimous
    consent. For the record, this article is titled ``The Great
    ObamaCare Enrollment Fraud.'' This is a Paragon Health
    Institute paper led by our witness Brian Blase.
        The paper takes a deep dive into the Affordable Care Act
    and explains how it is susceptible to fraud, opening the door
    to insurance brokers to take advantage of the Marketplace.
        Mr. Van Drew. I thank the gentleman. Without objection.
        I just want to say briefly and then we're going to move on
    to some other questions, that's what this hearing is about, and
    I wish we had more time.
        I know people have different visions of what healthcare
    should be in the United States of America, but we have a system
    now that's wrought with fraud that doesn't work, that isn't
    right, that's taking money from good American people and giving
    it to people who are fraudulent in so many different ways,
    individuals, insurance companies, brokers, and agents. Man,
    people are tired of it. We owe them to do better so we--
        Mr. Raskin. Mr. Chair.
        Mr. Van Drew. I'm on my time, please.
        Mr. Raskin. Are you? OK.
        Mr. Van Drew. I am.
        Mr. Raskin. It wasn't working.
        Mr. Van Drew. For that reason, regardless of what you feel,
    man, I hope--I'm not even going to ask you because I'm not out
    to embarrass anybody--I hope that every Member on the other
    side read the entire GAO report.
        I didn't know that was all that was in there. It was
    startling. It was scary. It was of concern. Republicans didn't
    write the damn thing. It came from a nonpartisan government
    organization that just does what's right. Sometimes I don't
    like what they do, but they do what they think is right and
    tell the truth.
        With that, I will yield to Mr. Correa.
        Mr. Correa. Thank you, Mr. Chair.
        Mr. Bagdoyan, you talked about fraud, the GAO report. In
    that GAO report, is there anything there that suggests that the
    premium tax credit should be eliminated?
        Mr. Bagdoyan. No. That is not part of our work. We're not
    looking at policy or viability, sir.
        Mr. Correa. OK. I'm going to come back to Professor Cooper.
        You talked about subsidies being important to cover with
    healthcare lower- and middle-class. We're talking about
    working-class families in this country who when these premiums'
    tax credits expire they will essentially be uninsured.
        That's really the issue here, insurance for working-class
    families, not about fraud, because there's a lot of fraud in a
    lot of areas in this government. To go after healthcare for
    working-class families, that's what we're talking about today.
        They're going to expire without a doubt. I want to see each
    and every one of us up here, what kind of phone calls we're
    going to get from our constituents when they end up not being
    able to pay for their healthcare in the richest country in the
    world with the most advanced medical technology in the world.
        Mr. Cooper, let me ask you a question: Senators are talking
    about healthcare savings plans as opposed to tax credits. How
    is this going to enable Americans to afford healthcare?
        Mr. Cooper. Thank you for the question, Congressman. I
    don't think they do. I don't think they fundamentally address
    three core issues.
        The first is it still exposes consumers to significant out-
    of-pocket costs. If you look at the plans people are going to
    enroll in, they're going to have out-of-pocket maximums for
    individuals at $10,000, for families around $20,000. We're not
    going--
        Mr. Correa. Small business owners, entrepreneurs, and their
    employees, how will this tax credit cancellation help them
    afford healthcare?
        Mr. Cooper. The health savings accounts won't make getting
    insurance easier. We're going to see premiums for a couple
    making $85,000 who are 60 years old jump by $20,000. It's not
    going to help those people.
        Mr. Correa. Let's talk about this red herring, fraud. There
    is fraud. Are individuals insured getting rich off this fraud?
    Getting a subsidy for their healthcare, are they using it to
    finance their vacations, or are we talking about an industry
    with brokers that are essentially making money?
        The 850 that were suspended. How many of those individuals
    actually spent time in jail or actually were able to cough up
    those illegally gotten gains? Anybody here tell me? How many of
    those folks spent a day in jail, gave back ill-earned savings,
    earnings that they got fraudulently?
        We're talking about fraud here today, and nobody, nobody
    went to jail. How serious really are we about fraud versus
    insuring individuals? Dead people and Social Security numbers.
    Did those people benefit from the subsidies, did their
    relatives benefit from the subsidies, or did the brokers make a
    buck off the government? Which one is it? Anybody?
        Ms. Bai. The insurance company and the brokers. They have
    every incentive.
        Mr. Correa. Why didn't they go to jail?
        Dr. Blase. There have actually been some people that have
    gone to jail.
        Mr. Correa. The punishment here is to punish every American
    that's subsidized today on the Affordable Care Act. They're the
    ones that are going to be punished because they are going to
    lose the ability to afford healthcare. That's what we're saying
    here today.
        I'm going to tell my colleagues here, let's see what
    happens January 1st next year when you start getting the phone
    calls from your constituents that are uninsured, lose
    insurance, or those hospitals that are relying on those
    premiums to stay open, not in the big cities but out in the
    countryside.
        That's what this debate is really about. Fraud? Let's get
    the DAs, attorneys general to go after these criminals. To go
    after middle-class hardworking families and take away the
    possibility of having healthcare and saying it's a broken
    system? If it's a broken system, I challenge my colleagues,
    show me something better. We're waiting for your solutions.
        Thank you, Mr. Chair, and I yield.
        Mr. Van Drew. Thank you, Mr. Correa.
        I'd like to submit with unanimous consent an article into
    the record. The press release is titled, ``President of
    Insurance Brokerage Firm and CEO of Marketing Company Convicted
    in $233 Million Affordable Care Act Enrollment Fraud.''
        The American people are the victim. This is a press release
    from the Department of Justice. I'd like to submit that. With
    that being said--
        Mr. Correa. Mr. Chair, I'd also like to submit some
    articles for the record:
        (1) The Kaiser Healthcare News, ``Health Savings Accounts,
    backed by GOP, cover fancy saunas, not insurance premiums'';
        (2) The Washington Post, ``Why Healthcare Savings Accounts
    aren't the fix Republicans hope for'';
        (3) By Fortune Magazine, ``Trump wants more healthcare
    savings, yet they can't pay for the insurance premiums'';
        (4) Kaiser Foundation, ``Fraud in the Marketplace,
    Enrollment and Eligibility: Five Things to Know'';
        (5) Keep Americans Covered fact sheet on healthcare; and
    then finally
        (6) Small Business Majority, ``The expiration of the ACA
    enhanced tax credits will devaState the small business
    community.''
        Mr. Van Drew. Without objection. I now recognize Mr. Issa
    from the great State of California.
        Mr. Issa. Thank you. Dr. Blase, is it true that if
    government subsidizes part of healthcare that it lowers the
    cost to the individual who pays for healthcare?
        Dr. Blase. Yes.
        Mr. Issa. Is it equally true that it has no side effect on
    the actual cost of healthcare?
        Dr. Blase. Yes. Well, it raises the taxpayer's cost.
        Mr. Issa. The fact is, if we want to lower the cost of
    healthcare, we have to attack the cost of healthcare, not the
    subsidy that ultimately lowers it for some while raising it for
    others through being taxed.
        There was a lot of discussion today about there isn't
    fraud. In your experience, if we prosecute as many frauds as we
    can, if we claw back as much dollars as we can, do we make the
    return on investment and the likelihood of additional
    fraudsters going down? In other words, is prosecution and
    clawback a deterrent?
        Dr. Blase. It is. Mr. Issa, I would say here the real
    problem is the underlying incentives. The underlying
    incentive--
        Mr. Issa. I'll get to that.
        Dr. Blase. OK.
        Mr. Issa. Then, the next one is an affirmative request to
    have a benefit, an unreasonable thing to ask for from everyone
    who receives the benefit, in general?
        Dr. Blase. I do not think that's an unreasonable request,
    no.
        Mr. Issa. Requiring that if someone wants to renew, they
    apply for it not only reduces fraud, but it clearly is intended
    to be a reasonable request that somebody say they want it and
    they're entitled to it.
        Dr. Blase. Especially if the product is nearly fully or
    entirely fully subsidized by the government.
        Mr. Issa. I agree. I would like to yield the remainder of
    my time to Mr. Onder.
        Mr. Onder. Thank you, Representative Issa.
        I wanted to read a portion of a letter in my office. I'll
    abbreviate it in interest of time. This is from a Missouri
    dairy farmer.
        He says,

            We seem to have gotten health insurance confused with actual
            healthcare. I can say from personal experience that having
            coverage through the Marketplace does absolutely nothing for me
            in regard to actually getting healthcare. The plan we've had
            for the last years has a deductible and copay that is so high I
            typically go to see doctors as a self-pay patient. This gets me
            a discount on care, and I will be charged less than half of
            what it would be to pay the deductible if insurance was billed.

    He said,

            Second, the consolidation of health providers has led to
            skyrocketing costs. This leads to total lack of price
            transparency.
    He goes on.
        Basically, this dairy farmer laid out the Republican plan
    for healthcare, which is to promote competition and
    transparency and thereby deliver lower prices and better
    quality.
        Dr. Blase, I know you covered this in your testimony, but
    this is important to reiterate. For the record, the expiring
    COVID-era subsidies are responsible for what percentage of the
    2026 premium?
        Dr. Blase. The expiring subsidies are responsible for a
    very small percentage, Congressman. About 3 percent are
    expiring.
        Mr. Onder. About three percent. The remaining 13.3 percent
    premium increase will still go into effect regardless of
    whether the COVID-era subsidies--
        Dr. Blase. Yes. Premiums are going up next year because of
    underlying problems with ObamaCare, not because the enhanced
    COVID-era subsidies are expiring.
        Mr. Onder. What is the actual cause of that 13.3 percent
    increase?
        Dr. Blase. There is a lot of structural problems with
    Obama-Care. The regulatory structure increases cost over time,
    and the underlying subsidy structure within ObamaCare has
    increased cost.
        I think Professor Cooper is right. There are underlying
    healthcare costs, but ObamaCare is inherently inflationary,
    both the regulations in ObamaCare and the subsidy structure in
    ObamaCare.
        If you want to lower healthcare prices and costs within
    ObamaCare, you need to tackle the basic architectural flaws.
        Mr. Onder. Thank you, Dr. Blase. Here we have this chart,
    if you can put that back up. We see that rates in ObamaCare
    went up twice that of the average employer-based plan and three
    times the rate of inflation.
        I yield to the Chair of the Full Committee, Representative
    Jordan.
        Chair Jordan. I thank the gentleman for yielding.
        I was just going to point out, this is something that
    doesn't happen too often, where the Democrat witness actually
    agrees with the Republican plan, because Professor Cooper said,
    quote, ``Subsidies aren't a solution, aren't the solution, they
    should be temporary.''
        That's where we're at. We want to address the underlying
    problem. Then, he talked about reform. He talked about site-
    neutral. We want all those things too. That's the point.
        A Democrat, someone, I think the Ranking Member said
    earlier, ``the Republicans don't have a fix.'' The Democrat fix
    is to continue the same old thing, which is just what that
    chart displayed doesn't work, and continue the subsidies
    forever, not temporary, as their witness said they should be.
        We want temporary subsidies to deal with the cliff, but we
    need the reforms that encourage choice and competition and
    would actually bring down premium costs.
        I wish we had more time. I appreciate the witnesses and the
    testimony they gave. I appreciate the study from the GAO, which
    showed just all the fraud that's taking place as well.
        I yield back to the Chair. Thank you for having this.
        Mr. Van Drew. Thank you, Chair.
        Let me just say I agree with the Chair. It's something I've
    been saying all along. Temporarily, you have got to do
    something. Long term, we have to do so much better. That's what
    this was about, this hearing.
        With that being said, it concludes today's hearing. We
    thank our witnesses for appearing before the Subcommittee
    today. Feel free before I gavel out. Yes, go ahead.
        Mr. Raskin. This is from the American Hospital Association.
    This is ``Setting the Record Straight: Separating Fact From
    Fiction on Health Insurance Marketplace Fraud''; Professor
    Cooper's article in The New York Times, ``The Health Care
    Debate We Really Need''; and finally, the Georgetown Center on
    Health Insurance Reform, ``Health Savings Accounts: Robin Hood
    in Reverse.''
        Mr. Van Drew. I thank the Ranking Member. Without
    objection.
        That concludes today's hearing. Without objection, all
    Members will have five legislative days to submit additional
    written questions for the witnesses or additional materials for
    the record.
        I again want to apologize to you all. I wanted to keep you
    here until you were exhausted and we had a couple of hours we
    were stuck on the floor. You did a good job. Thank you.
        Again, I apologize to the other side of the aisle. Again, I
    wish we could have debated even longer.
        With that, without objection--and I apologize to our guys.
    Without objection, this hearing is adjourned.
        [Whereupon, at 5:06 p.m., the Subcommittees were
    adjourned.]

        All materials submitted for the record by Members of the
    Subcommittee on Oversight and Subcommittee on the Administra-
    tive State, Regulatory Reform, and Antitrust can be found at:
    https://docs.house.gov/Committee/Calendar/ByEvent.aspx?Event
    ID=118732.

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