The Paragon Health Institute estimates that in 2026, taxpayers will spend $25 billion funding insurance for 6.2 million improper enrollees in the Affordable Care Act marketplace. The estimate, analyzed in a new article from the Competitive Enterprise Institute published June 22, 2026, reveals a massive discrepancy between official enrollment numbers and census survey data that suggests widespread fraud and misreporting in the health insurance subsidy system. The problem appears concentrated among the lowest-income subsidy recipients, raising questions about whether recent enrollment surges represent legitimate sign-ups or gaming of the system.
The data shows a dramatic split between official government enrollment figures and what people actually report in surveys. From 2018 to 2021, official enrollment numbers tracked closely with the number of people who told census surveyors they had ACA coverage. But in 2022, the first year after subsidies were expanded, that alignment broke down. By 2024, the difference had grown to 10 million people, with 8 million of that gap—80 percent—coming from a single income group: those reporting earnings between 100 percent and 150 percent of the federal poverty line. In that income bracket, official enrollment nearly tripled from pre-expansion levels while survey data remained flat. Even more striking, in certain states the number of people enrolled with income between 100 percent and 150 percent of the poverty level exceeded the total number of people actually living in that income range. Meanwhile, the other four income groups tracked by subsidy cutoffs showed official enrollment and survey estimates running nearly parallel across all years.
According to the analysis, 56 percent of all ACA sign-ups in 2026 reported income in the 100 percent to 150 percent range. The report identifies three reasons why improper enrollment is concentrated in this bracket. In states that didn't expand Medicaid, individuals earning below 100 percent of the poverty line may overestimate their income to qualify for subsidies. Enrollees with income above 150 percent may underestimate their income to receive larger subsidies. And because individuals earning 100 percent to 150 percent of the poverty line qualify for fully subsidized plans, they're the easiest and most lucrative group for brokers and insurers to target.
The report explores whether Medicaid unwinding—when people were removed from Medicaid rolls after COVID protections ended—could explain the 2024 enrollment spike. Official enrollment jumped by 3.3 million in the 100 percent to 150 percent income group from 2023 to 2024, coinciding with Medicaid disenrollments. But survey data showed only a 31,177-person bump in that same group and year. The analysis argues that people who lost Medicaid would be more, not less, aware of their health coverage, since what was free under Medicaid now affects their monthly expenses. If the spike consisted of legitimate sign-ups, survey respondents should have reported it. The report notes that Medicaid unwinding wasn't completed until August 2024, just before the 2025 open enrollment period, so when 2025 census data is released this September, it will show whether survey data finally catches up to official numbers. If it doesn't, the recent increases in official enrollment will remain hard to attribute to legitimate sign-ups.
The broader implication is clear: billions in taxpayer dollars may be flowing to people who either don't exist, aren't actually enrolled, or are misreporting their income to access benefits they don't qualify for. The report concludes that a better understanding of how low-income individuals fit in the health insurance system may be key to ensuring the ACA serves its intended purpose without wasting taxpayer dollars. With $25 billion on the line this year alone, the gap between official enrollment and reality isn't just a statistical curiosity—it's a fiscal crisis hiding in plain sight.