The Biden administration has suspended enrollment for more than 760,000 individuals in federal health insurance plans offered under the Affordable Care Act (ACA), citing concerns over fraudulent and improper enrollments. The move, announced on September 22 by Vice President JD Vance, is part of a broader anti-fraud initiative expected to save approximately $2.2 billion in taxpayer funds.
The Centers for Medicare & Medicaid Services (CMS) took action in August by canceling roughly 315,000 health plans due to unverified citizenship or immigration status and suspected inaccuracies in enrollment. In tandem, CMS has barred 569 insurance brokers from submitting new applications for plan year 2026, alleging that these brokers were responsible for submitting applications with incomplete or false information, including missing Social Security numbers.
“These are a mix of both phantom people and actual individuals who do not meet eligibility requirements,” Vance said, adding that some individuals were enrolled without their knowledge by brokers. CMS Administrator Mehmet Oz characterized the affected enrollees as “phantoms,” noting most have never filed claims and could not be reached despite repeated contact attempts.
In response to the perceived risk of ongoing fraud, the CMS has instituted a six-month freeze on new broker registrations using an expedited rulemaking process, bypassing the traditional notice-and-comment period. This moratorium, which will last until February 1, 2027, aims to curb fraudulent activity concentrated among insurance agents. CMS accused some brokers of enrolling consumers without their consent, altering plans without permission, submitting false information, and creating questionable applications to collect commissions.
Industry analysts and trade groups have expressed concern over the freeze’s potential impact. Julie Utterback, an analyst at Morningstar, said the moratorium could reduce enrollment and strain insurers’ financial margins amid a contracting market following the expiration of enhanced subsidies implemented during the COVID-19 pandemic. Mychal Walker, president of the National Association of Benefits and Insurance Professionals, cautioned that the broad freeze could unfairly penalize legitimate brokers, urging more targeted measures against fraudulent actors.
CMS officials project that unauthorized enrollments could lead to as much as $6.6 billion in improper federal spending for the upcoming 2026 plan year. The cancellations and broker restrictions are overseen by a task force led by Vice President Vance and including Health Secretary Robert F. Kennedy Jr., CMS Administrator Oz, and Federal Trade Commission Chairman Andrew Ferguson.
An earlier Department of Health and Human Services report estimated that nearly half of new ACA enrollments between 2021 and 2024 might have involved improper or fraudulent claims. CMS noted that over 1 million individuals had enrolled in ACA coverage without providing a valid Social Security number, underscoring concerns over eligibility verification processes. The agency plans to conduct further verification for an estimated 419,000 to 450,000 enrollees to confirm residency and income eligibility.
The administration’s crackdown comes amid broader challenges for the ACA marketplace, as millions of people have dropped coverage this year due to rising premiums and the conclusion of temporary COVID-era subsidies.