WASHINGTON (Reuters) - The Trump administration is halting enrollment in Obamacare health plans for more than 760,000 enrollees it believes were fraudulently signed up, Vice President JD Vance said on Tuesday, part of an anti-fraud effort he estimated would save $2.2 billion in taxpayer money.
The US Centers for Medicare & Medicaid Services canceled about 315,000 plans last month, citing unverified citizenship or immigration documentation and suspected improper enrollments.
The agency will bar 569 brokers it accused of submitting "statistically implausible rates of plan year 2026 applications" without necessary applicant information such as a Social Security number.
The plans, created by Democratic President Barack Obama's signature Affordable Care Act, offer income-based subsidies. Republican President Donald Trump sought unsuccessfully in his first term to overturn the law and has proposed changes that would make the plans less comprehensive.
Millions dropped coverage this year as rising medical costs and the expiration of extra COVID-era subsidies made monthly premiums unaffordable.
Vance described the canceled group as "a mix of both phantom people, but also real people who just don't meet the eligibility requirements," including some he said who were signed up by brokers without their knowledge.
Vance said the administration would further verify between 419,000 and 450,000 more people to confirm they are legal US residents meeting income thresholds.
CMS Administrator Mehmet Oz said the enrollees were treated as "phantoms" because officials believe most either do not exist or were unaware they had coverage, having never filed a claim and being unreachable despite repeated contact attempts.
BROKER REGISTRATION FREEZE
The administration is using an emergency-style rulemaking process to impose an immediate, industry-wide freeze on new Obamacare broker registrations, bypassing the usual advance notice-and-comment period. Oz called it a "temporary national moratorium" for six months, saying most fraud was concentrated among such agents.
CMS said some brokers have allegedly enrolled people without genuine consent, changed people's plans without permission, used inaccurate information, or created questionable applications to receive commissions.
The agency said brokers without a 2026 registration will be frozen out until February 1, 2027.
The freeze could weigh on insurers that rely on brokers to sign up customers, analysts said.
ENROLLMENT IMPACT WARNING
Because brokers are key to how people enroll, the freeze "may negatively affect enrollment and potentially margins related to higher risk pool in a market that is already contracting" as enhanced subsidies expire, said Morningstar analyst Julie Utterback.
A blanket moratorium "would punish legitimate professionals instead of targeting the bad actors responsible for fraud," said Mychal Walker, president of the National Association of Benefits and Insurance Professionals, a trade group that urged CMS to adopt targeted safeguards instead.
CMS said unauthorized Obamacare enrollments could cost up to $6.6 billion in improper federal spending for the 2026 plan year.
The cancellations were led by Vance's anti-fraud task force, which includes Health Secretary Robert F. Kennedy Jr., Oz and Federal Trade Commission Chairman Andrew Ferguson.
CMS said it expects a return of about $2.2 billion in advance payments of the premium tax credit for the canceled enrollments. Oz said the figure would climb, calling it "the tip of the iceberg."
An HHS report released earlier this year, opens new tab estimated nearly half of new Obamacare enrollments between 2021 and 2024 may have been improper, phantom or fraudulent. CMS said more than 1 million enrollees received coverage without providing a Social Security number.