By Tracy Pennycuick
Due to the size of the federal government and the amount of money involved with the Affordable Care Act, no one is surprised to learn that there is fraud. Brokers enrolling thousands of consumers without authorization to collect commissions; companies submitting false enrollment applications using stolen identities; individuals filing fraudulent applications with manipulated income data to maximize federal tax credits, or just plain error on the part of applicants or staff.
Unauthorized enrollments have become a significant enforcement priority for federal regulators, with the Centers for Medicare & Medicaid Services (CMS) increasing oversight of insurance brokers and agents and implementing stronger consumer consent and verification requirements to reduce fraudulent enrollments.
In 2025, CMS cited research suggesting 4 to 5 million people may have been improperly enrolled in subsidized ACA coverage in 2024, while more recent analyses from outside government have estimated as many as 6.4 million potentially improper enrollments.
Every fraudulent enrollment undermines public confidence in a program intended to help families obtain affordable health insurance. It also diverts taxpayer dollars away from those who legitimately qualify for assistance and can leave unsuspecting consumers facing unexpected tax liabilities or disruptions in their health coverage. Strong safeguards are not barriers to access; they are essential protections that ensure benefits are available for eligible Pennsylvanians while preserving the integrity and long-term sustainability of the program.
Unfortunately, fraud and abuse occur at the state level as well.
Pennsylvania’s Health Insurance Exchange Authority (Pennie) is our health insurance marketplace, designed to help residents find affordable coverage. It has been acknowledged that it is affected by the same federal program integrity issues that have impacted ACA marketplaces nationwide, including concerns about improper enrollment, waste, fraud, and abuse.
The numbers paint a stark picture.
The state Senate Banking and Insurance Committee revealed that enrollment fraud has been a problem for years, facing both federal and state-based ACA exchanges, such as Pennie. In fact, the committee reported that for insurers offering plans on Pennie, $19.6 million was paid out in fraudulent claims in 2025 alone. Even more troubling, they identified approximately $163.6 million in fraudulent claims billed against insurers for 2026.
A recent report from Paragon Health alleged that Pennsylvania had more than 21,000 improper enrollments. At a June 5th meeting with Pennie officials, presenters noted that the cancellation of fraudulent policies had increased dramatically due to a sophisticated fraud scheme. In one case, an insurer had to review more than 4,500 policies for potential fraud.
Tackling fraud in our health insurance marketplace is critical to protecting consumers and the taxpayers who pay for subsidized healthcare.
To address this critical issue, I introduced legislation – Senate Bill 1439 that enhances fraud identification within Pennie by requiring documentation for enrollment in Pennie plans to include proof of residency or documented proof associated with the individual’s intent to reside in the Commonwealth. Additionally, the legislation will require the establishment of an Office of Fraud Prevention within Pennie to solely focus on identifying and combatting fraud before it takes place.
The measure has bipartisan support and mirrors language adopted by the House, on June 9th, by a vote of 132-70, and represents common-sense provisions to ensure the state takes every necessary step to prevent consumers from experiencing higher insurance costs due to fraud on the state exchange.
Fighting fraud is something we can all agree upon.
CONTACT: Matthew Szuchyt (215) 541-2388