[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
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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:]
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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.
[all]