“Declining enrollment is not necessarily evidence of a failing insurance market,” says health expert Sally Pipes. “It may instead reflect a long-overdue correction to enrollment figures that have become inflated by fraud, abuse, and weak eligibility verification.”

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Enrollment on the Obamacare exchanges is falling for the first time in years. The exchanges launched on January 1, 2014—nearly four years after President Obama signed the Affordable Care Act into law on March 23, 2010.

A new analysis from KFF estimates that the number of people enrolled in an exchange plan this year could drop by roughly 5 million following the expiration of more generous pandemic-era premium subsidies at the end of last year.

Progressives view that decline as evidence that fewer Americans will have access to affordable coverage. But a new analysis from the Paragon Health Institute suggests another possibility. A substantial share of recent exchange enrollment may never have been legitimate in the first place.

According to Paragon, roughly 6.2 million marketplace enrollees this year may be improperly enrolled in the exchanges. Some may not actually qualify for the subsidies they receive. Others may have been enrolled in plans without their knowledge.

In other words, declining enrollment is not necessarily evidence of a failing insurance market. It may instead reflect a long-overdue correction to enrollment figures that have become inflated by fraud, abuse and weak eligibility verification.

Paragon’s analysis focuses on Americans reporting incomes between 100% and 150% of the federal poverty level—between $15,960 and $23,940 for an individual. That is the income range that benefited most from the enhanced Obamacare subsidies enacted during the pandemic and later extended by Congress.

The enhanced subsidies allowed many people in that income band to secure exchange coverage with no monthly premium at all.

Florida is the most striking example. According to Paragon, more than 3 million exchange enrollees in the state reported incomes between 100% and 150% of the federal poverty level this year. Yet the report estimates that just 636,000 Floridians plausibly had incomes within that range.

That gap strongly suggests that exchange enrollment data are being distorted by widespread misreporting of income and improper enrollment activity.

Paragon identified similar patterns in a number of states, particularly those that rely on HealthCare.gov, the federal exchange platform. Based on those enrollment patterns, the report estimates that roughly 6.2 million marketplace enrollees nationwide may be improperly enrolled this year—more than one-quarter of all exchange enrollment—at a potential cost to taxpayers of as much as $25 billion in federal subsidies.

The report’s findings are consistent with other evidence that serious problems exist within the exchanges.

In 2024, the Centers for Medicare and Medicaid Services reported receiving roughly 50,000 complaints of unauthorized marketplace enrollments or plan switches during just the first quarter of the year. Around the same time, CMS suspended approximately 200 agents and brokers pending investigations into alleged misconduct involving unauthorized enrollments and other abusive marketplace practices.

A separate Paragon analysis found that 12 million exchange enrollees in 2024 generated no insurance claims at all that year. Some may simply have remained healthy—and thus sought no medical care that year. But it’s difficult to believe that such a large population would enroll in subsidized coverage and never use it at all.

Unauthorized enrollment and other improper enrollment practices offer a more plausible explanation. Brokers and enrollment firms can collect commissions and facilitate subsidy payments regardless of whether the enrollee ever seeks care—or knows that they’ve been signed up for coverage at all.

All of which suggests that raw Obamacare enrollment figures deserve far more scrutiny than they typically receive.

KFF estimates that average monthly marketplace enrollment could drop from 22.3 million in 2025 to about 17.5 million this year, given the expiration of the enhanced premium subsidies. Some of that decline will reflect consumers who decide coverage is too expensive.

But Paragon’s analysis suggests that falling enrollment reflects the unwinding of a marketplace increasingly distorted by fraud, abuse and weak eligibility verification.

Before policymakers lament declining enrollment, they should make sure the enrollment they’re counting is real.