his space has previously reported on the fraud associated with Obamacare, particularly the enhanced Exchange subsidies passed in 2021 that Democrats want to extend. In recent weeks, the Congressional Budget Office (CBO) has now admitted that the law’s subsidy structure encourages enrollees to lie about their income.
These reports come on top of the fact that passing a subsidy extension could expand funding for abortion-related travel, in ways that undermine state pro-life protections. It’s all enough to make one wonder why Republican “leaders” are making noises about extending the enhanced subsidies before their expiration on December 31.
Impact of Skewed Incentives
Prior studies by the Paragon Health Institute have examined the incentives created by the Exchange subsidy regime to falsify income estimates. (Disclosure: While I have done work for Paragon, I had no involvement with this particular report, and am writing this article on my own behalf.)
Those incentives work in two ways: On the one hand, enrollees with income below the poverty level have an incentive to inflate their income up to the poverty level, because otherwise they will not qualify for subsidies at all. (This dynamic largely applies in the 10 red states that have not expanded Medicaid, because enrollees with below-poverty income levels in expansion states would qualify for Medicaid expansion.) On the other hand, enrollees with higher incomes — say, between two and four times the poverty level — have an incentive to understate their income, to qualify for the richest subsidies.
Paragon concluded that, in 2025, there are approximately 6.4 million people with incomes just above the poverty level with potentially fraudulent enrollment, either for over- or under-stating their income. In its estimation, these enrollees led to approximately $27.1 billion in estimated taxpayer losses due to Exchange fraud.
Budget Office Estimates
As part of its responses to questions from congressional Republicans, CBO recently revealed for the first time that it, too, believes enrollees are lying about their income to qualify for Obamacare subsidies:
Estimating the number of people who have improperly received subsidies for marketplace [i.e., Exchange] coverage is difficult. The agency has, however, specifically estimated that 1.3 million marketplace enrollees improperly claimed the premium tax credit [i.e., subsidies] via intentional overstatement of income for 2023; 2.3 million enrollees did so for 2025.
The budget agency went on to explain that it could calculate this improper enrollment “because it appears in enrollment data as an unusual concentration of enrollees reporting income just above” the poverty level.
For instance, CBO noted that the number of people reporting income between 100 percent and 105 percent of the poverty level in non-expansion states was 2.6 times the number of people reporting income between 105 percent and 110 percent of the poverty level. CBO also cited tax reporting data indicating that, in 2023, a large number (39 percent) of enrollees claiming the richest subsidies — which are calculated based on expected income — ultimately reported actual income below the poverty level.
Hellbound and Down 