As usual in politics, the truth and best action is usually somewhere at the center
There is a growing debate over the significant decline in Affordable Care Act (ACA) Exchange enrollment in 2026. The Trump administration and conservative policy organizations such as the Paragon Health Institute argue that much of the decline is good news: improper and fraudulent enrollees are finally being removed from the rolls. Others, including healthcare policy group KFF, point to a much different culprit — the expiration of the enhanced premium subsidies and the resulting affordability crisis.
As I wrote recently in a Healthcare Labyrinth Newsfeed, I think the truth is somewhere in the middle.
I am a strong supporter of affordable universal access to healthcare. It is one of the central tenets of my healthcare reform proposal. Premiums, deductibles, and other cost-sharing have to be reasonable if we expect people to maintain coverage, access healthcare, and invest in their health.
When healthcare costs too much, people make predictable decisions. They drop coverage. They move to plans with higher deductibles. They postpone physician visits, tests, and procedures. Eventually, some get sicker and enter the healthcare system through the most expensive doors.
That is neither good healthcare policy nor good economics.
One side: An affordability crisis drives the enrollment decline
The enhanced premium tax credits enacted during the COVID years expired at the end of 2025. There is substantial evidence that affordability (driven by premium hikes) has played an important role in subsequent enrollment losses.
KFF reports that Exchange Marketplace enrollment fell from 22.1 million effectuated enrollees in 2025 to 19.2 million in February 2026 — a decline of roughly 3 million people. KFF notes that the decline occurred as consumers experienced substantial increases in what they actually had to pay for coverage.
KFF found that average enrollee premium payments increased 58%, from $113 to $178 per month. Average Exchange deductibles increased by more than $1,000, or 37%, to a record $3,786. Consumers also migrated toward higher-deductible plans as they attempted to offset premium increases.
There is another compelling data point. State-based Exchanges generally experienced smaller enrollment declines than states relying on the federal Marketplace. New Mexico, which fully replaced the expired enhanced federal subsidies with state assistance, was the only state to see effectuated enrollment actually increase.
It is difficult to look at those numbers and argue affordability did not matter.
I would have extended the enhanced premium subsidies, although with reforms. Among other things, I believe everyone should pay something toward their coverage, even if the contribution is modest. I also would have coupled an extension with stronger eligibility verification, broker oversight, and other fraud and program-integrity reforms.
That would have preserved affordability without simply perpetuating the weaknesses that emerged under the enhanced subsidy structure. But Democrats are crafting a false narrative that expired subsidies have caused the affordability crisis. It has been around for years. The subsidies do not impact employer coverage and we have seen massively rising premiums and employee costs for years.
The other side: Paragon has a point on improper enrollment
At the same time, supporters of the enhanced subsidies should not dismiss the evidence of improper and fraudulent enrollment.
Paragon has spent several years examining this issue. Its latest analysis estimates approximately 6.2 million improper Exchange sign-ups in 2026, representing roughly 27% of all Exchange sign-ups. Some debate its methodology and conclusions because Paragon essentially estimates improper enrollment by comparing enrollment in the highly subsidized 100% to 150% of federal poverty level income category against estimates of the potentially eligible population. But studies are always based on assumptions and Pragon’s approach seems valid. The findings certainly have merit. Is there any doubt we have massive fraud in healthcare enrollment, especially government programs? And wouldn’t that logically extend to the Exchange enrollment process? Program-integrity concerns should not simply be waved away by opponents.
There is little question in my mind that completely free coverage created an environment ripe for abuse. When a plan costs the consumer nothing, an unscrupulous broker or agent can enroll someone without requiring the person to make a meaningful economic decision. Paragon and others have documented cases involving unauthorized enrollments and income manipulation designed to maximize subsidies. Paragon also points to automatic reenrollment and weaknesses in enrollment verification as factors that allowed questionable enrollments to persist.
This is where the concept of “ghost” or “phantom” enrollees becomes important. Paragon notes that nearly 12 million Exchange enrollees, or 35%, had no medical claims in 2024, compared with much lower rates before the pandemic-era subsidy expansion. Zero claims certainly do not prove fraud — healthy people can legitimately have insurance and not use healthcare in a particular year. But the magnitude of the increase deserves scrutiny, particularly when combined with documented broker abuses and unauthorized enrollment.
Free coverage can also change consumer behavior even when there is absolutely no fraud involved. If people pay nothing for something, some inevitably place less value on it. An individual might accept an Exchange plan because there is no financial downside to doing so, yet have little knowledge of the benefits, little engagement with the health plan, and little intention of actually accessing healthcare.
Coverage on paper is not the same thing as access to care. Sometimes, people cannot afford to use their coverage. In this scenario, they may not know about their healthcare or care about it.
Plan impacts
Impacts on plans could be big. Plans have already argued that lower enrollments are driving worsening risk and premium hikes. The vicious cycle could continue. Indeed, KFF says insurers are proposing a median premium increase of about 15% for 2027.
Exchange plan Oscar Health expects between 250,000 and 300,000 of its members to be retroactively disenrolled in connection with the program integrity initiatives. The expected disenrollments represent between 8% and 10% of Oscar’s total membership. Oscar believes that some the members are wrongly classified as improper enrollments by the administration.
So, as often happens in healthcare, both are true
Healthcare debates increasingly force policymakers into ideological corners. This one should not.
The evidence indicates that higher premiums and cost-sharing caused legitimate consumers to drop Exchange coverage in 2026, much as those with employer coverage dropped their insurance or now cannot afford to use it. That should concern anyone who believes in affordable universal access.
There is also credible evidence that the combination of zero-premium coverage, generous federal subsidies, weak verification, automatic reenrollment, and unscrupulous brokers created substantial improper enrollment. Taxpayers should not be asked to subsidize coverage for people who are ineligible, fictitious, unknowingly enrolled, or already covered elsewhere.
Both can be true.
The policy answer should therefore be balance.
Make coverage affordable enough that Americans can obtain insurance and actually use healthcare. Require reasonable consumer contributions so there is engagement with the coverage. Strengthen eligibility verification. Aggressively police brokers and agents who enroll people without authorization or manipulate enrollees’ income. Improve subsidy reconciliation and make insurers, brokers, and enrollment platforms accountable when they facilitate improper enrollment.
And then tackle the underlying reason subsidies have to be so enormous in the first place: the extraordinary cost of American healthcare.
That brings me back to the broader reforms I advocate. Affordable universal access has to go hand in hand with healthcare price reform and a fundamental pivot toward care management and primary care. Simply subsidizing ever-higher premiums is not a sustainable affordability strategy. Nor is allowing legitimate people to become uninsured in the name of eliminating fraud.
The Exchange enrollment debate should not be about choosing between affordability and program integrity. A rational healthcare system should demand both.
#exchanges #coverage #healthcare #fwa
— Marc S. Ryan
