“Fighting Obamacare Subsidy Fraud: Is the Administrative Procedure Act Working as Intended?”

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34                   FIGHTING OBAMACARE SUBSIDY FRAUD:5                  IS THE ADMINISTRATIVE PROCEDURE ACT6                         WORKING AS INTENDED?7=======================================================================89                             JOINT HEARING1011                               BEFORE THE1213                       SUBCOMMITTEE ON OVERSIGHT1415                             JOINT WITH THE1617               SUBCOMMITTEE ON THE ADMINISTRATIVE STATE,18                    REGULATORY REFORM, AND ANTITRUST1920                                 OF THE2122                       COMMITTEE ON THE JUDICIARY2324                     U.S. HOUSE OF REPRESENTATIVES2526                    ONE HUNDRED NINETEENTH CONGRESS2728                             FIRST SESSION2930                               __________3132                      WEDNESDAY, DECEMBER 10, 20253334                               __________3536                           Serial No. 119-423738                               __________3940         Printed for the use of the Committee on the Judiciary4142[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]4344               Available via: http://judiciary.house.gov4546                               __________4748                   U.S. GOVERNMENT PUBLISHING OFFICE4962-276                  WASHINGTON : 202650-----------------------------------------------------------------------------------5152                       COMMITTEE ON THE JUDICIARY5354                        JIM JORDAN, Ohio, Chair5556DARRELL ISSA, California             JAMIE RASKIN, Maryland, Ranking57ANDY BIGGS, Arizona                      Member58TOM McCLINTOCK, California           JERROLD NADLER, New York59THOMAS P. TIFFANY, Wisconsin         ZOE LOFGREN, California60THOMAS MASSIE, Kentucky              STEVE COHEN, Tennessee61CHIP ROY, Texas                      HENRY C. ``HANK'' JOHNSON, Jr.,62SCOTT FITZGERALD, Wisconsin              Georgia63BEN CLINE, Virginia                  ERIC SWALWELL, California64LANCE GOODEN, Texas                  TED LIEU, California65JEFFERSON VAN DREW, New Jersey       PRAMILA JAYAPAL, Washington66TROY E. NEHLS, Texas                 J. LUIS CORREA, California67BARRY MOORE, Alabama                 MARY GAY SCANLON, Pennsylvania68KEVIN KILEY, California              JOE NEGUSE, Colorado69HARRIET M. HAGEMAN, Wyoming          LUCY McBATH, Georgia70LAUREL M. LEE, Florida               DEBORAH K. ROSS, North Carolina71WESLEY HUNT, Texas                   BECCA BALINT, Vermont72RUSSELL FRY, South Carolina          JESUS G. ``CHUY'' GARCIA, Illinois73GLENN GROTHMAN, Wisconsin            SYDNEY KAMLAGER-DOVE, California74BRAD KNOTT, North Carolina           JARED MOSKOWITZ, Florida75MARK HARRIS, North Carolina          DANIEL S. GOLDMAN, New York76ROBERT F. ONDER, Jr., Missouri       JASMINE CROCKETT, Texas77DEREK SCHMIDT, Kansas78BRANDON GILL, Texas79MICHAEL BAUMGARTNER, Washington80                                 ------8182                       SUBCOMMITTEE ON OVERSIGHT8384                 JEFFERSON VAN DREW, New Jersey, Chair8586BARRY MOORE, Alabama                 JASMINE CROCKETT, Texas, Ranking87ROBERT F. ONDER, Jr., Missouri           Member88DEREK SCHMIDT, Kansas                JARED MOSKOWITZ, Florida89BRANDON GILL, Texas                  HENRY C. ``HANK'' JOHNSON, Jr.,90                                         Georgia91                                 ------9293               SUBCOMMITTEE ON THE ADMINISTRATIVE STATE,94                    REGULATORY REFORM, AND ANTITRUST9596                   SCOTT FITZGERALD, Wisconsin, Chair9798DARRELL ISSA, California             JERROLD NADLER, New York, Ranking99BEN CLINE, Virginia                      Member100LANCE GOODEN, Texas                  J. LUIS CORREA, California101HARRIET HAGEMAN, Wyoming             BECCA BALINT, Vermont102MARK HARRIS, North Carolina          JESUS G. ``CHUY'' GARCIA, Illinois103DEREK SCHMIDT, Kansas                ZOE LOFGREN, California104MICHAEL BAUMGARTNER, Washington      HENRY C. ``HANK'' JOHNSON, Jr.,105                                         Georgia106107               CHRISTOPHER HIXON, Majority Staff Director108                ARTHUR EWENCZYK, Minority Staff Director109110                           C O N T E N T S111112                              ----------113114                      Wednesday, December 10, 2025115                           OPENING STATEMENTS116117                                                                   Page118The Honorable Jefferson Van Drew, Chair of the Subcommittee on119  Oversight from the State of New Jersey.........................     1120The Honorable Jasmine Crockett, Ranking Member of the121  Subcommittee on Oversight from the State of Texas..............     4122The Honorable Scott Fitzgerald, Wisconsin, Chair of the123  Subcommittee on the Administrative State, Regulatory Reform,124  and Antitrust..................................................     6125The Honorable Jamie Raskin, Ranking Member of the Committee on126  the Judiciary from the State of Maryland.......................     7127The Honorable Jim Jordan, Chair of the Committee on the Judiciary128  from the State of Ohio.........................................    10129130                               WITNESSES131132Seto J. Bagdoyan, Director of Audit Services, Forensic Audits &133  Investigative Service, Government Accountability Office134  Oral Testimony.................................................    12135  Prepared Testimony.............................................    14136Dr. Brian C. Blase, President, Paragon Institute of Health137  Oral Testimony.................................................    50138  Prepared Testimony.............................................    52139Dr. Ge Bai, Professor of Accounting, Johns Hopkins Carey Business140  School141  Oral Testimony.................................................    72142  Prepared Testimony.............................................    74143Zack Cooper, Associate Professor of Public Health and Economics,144  Yale University145  Oral Testimony.................................................    85146  Prepared Testimony.............................................    87147148          LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING149150All materials submitted for the record by the Subcommittee on151  Oversight and the Subcommittee on the Administrative State,152  Regulatory Reform, and Antitrust are listed below..............   114153154Materials submitted by the Honorable Jefferson Van Drew, Chair of155  the Subcommittee on Oversight from the State of New Jersey, for156  the record157    A report entitled, ``Patient Protection and Affordable Care158        Act: Preliminary Results from Ongoing Review Suggest159        Fraud Risks in the Advance Premium Tax Credit Persist,''160        Dec. 3, 2025, U.S. Government Accountability Office161    A press release entitled, ``President of Insurance Brokerage162        Firm and CEO of Marketing Company Convicted in $233M163        Affordable Care Act Enrollment Fraud Scheme,'' Nov. 17,164        2025, Office of Public Affairs, The Department of Justice165An article entitled, ``The Great Obamacare Enrollment Fraud,''166  Jun. 2024, Paragon Health Institute, submitted by the Honorable167  Barry Moore, a Member of the Subcommittee on Oversight from the168  State of Alabama, for the record169Materials submitted by the Honorable J. Luis Correa, a Member of170  the Committee on the Judiciary from the State of California,171  for the record172    An article entitled, ``Health Savings Accounts, Backed by173        GOP, Cover Fancy Saunas but Not Insurance Premiums,''174        Dec. 5, 2025, KFF Health News175    An article entitled, ``Why health savings accounts aren't the176        fix Republicans hope for,'' Nov. 25, 2025, The Washington177        Post178    An article entitled, ``Trump wants more health savings179        accounts. A catch: they can't pay insurance premiums,''180        Dec. 5, 2025, Fortune181    An article entitled, ``Fraud in Marketplace Enrollment and182        Eligibility: Five Things to Know,'' Jun 30, 2025, Kaiser183        Foundation184    A fact sheet entitled, ``Tell Congress: Don't make health185        insurance less affordable for 28,000 working Californians186        and their families in CA-46,'' Keep Americans Covered187    An article entitled, ``The expiration of the ACA's enhanced188        premium tax credits will devastate the small business189        community,'' 2025, Small Business Majority190Materials submitted by the Honorable Jamie Raskin, Ranking Member191  of the Committee on the Judiciary from the State of Maryland,192  for the record193    An article enitled, ``Setting the Record Straight: Separating194        Fact from Fiction on Health Insurance Marketplace195        Fraud,'' Aug. 28, 2025, American Hospital Association196    An article entitled, ``$27,000 a Year for Health Insurance.197        How Can We Afford That?'' Dec. 10, 2025, The New York198        Times199    An article entitled, ``Health Savings Accounts: Robin Hood in200        Reverse,'' Apr. 15, 2024, Georgetown University201202                   FIGHTING OBAMACARE SUBSIDY FRAUD:203        IS THE ADMINISTRATIVE PROCEDURE ACT WORKING AS INTENDED?204205                              ----------206207                      Wednesday, December 10, 2025208209                        House of Representatives210211                       Subcommittee on Oversight212213               Subcommittee on the Administrative State,214215                    Regulatory Reform, and Antitrust216217                       Committee on the Judiciary218219                             Washington, DC220221    The Subcommittees met, pursuant to notice, at 3:44 p.m., in222Room 2141, Rayburn House Office Building, the Hon. Jefferson223Van Drew [Chair of the Subcommittee] presiding.224    Present: Representatives Van Drew, Fitzgerald, Moore, Issa,225Onder, Harris, Crockett, Correa, Moskowitz, Johnson, Balint,226and Garcia.227    Mr. Van Drew. The Subcommittee will come to order. Without228objection, the chair is authorized to declare a recess at any229time.230    We welcome everyone to today's hearing. Thank you so much231for being here. I know it's been a little unsettling, a little232crazy in New Jersey vernacular, but it is what it is, and we do233appreciate your time and your presence.234    I now recognize Dr. Onder to lead us in the pledge of235allegiance. Then, I ask you to remain standing for a moment of236silence.237    All. I pledge allegiance to the flag of the United States238of America, and to the Republic for which it stands, one239Nation, under God, indivisible, with liberty and justice for240all.241    Mr. Van Drew. I will now recognize myself for an opening242statement.243    Today this Committee examines a serious question that244effects millions of average, everyday Americans every single245day. As the Affordable Care Act as written and as implemented246allowed waste, fraud and abuse to flourish, while real American247families are left to struggle under a system that was supposed248to protect them. This is about real people, real families in249every district and every State in this great country.250    Good families who work hard, play by the rules and yet are251still getting crushed by a system that was supposed to help and252protect them. It's not fair. It's wrong. Frankly, it is253disgusting.254    The people have done nothing wrong. The politicians have255let them down. That is the real reason we're here. We're not256here--and I almost feel like saying this, I hope I don't have257to stay it over and over again, we are not here to debate what258a new healthcare plan may look like. That is under another259Committee's jurisdiction.260    We are not here to entertain scare tactics about stripping261healthcare away. I really do believe no Republican wants to do262that. Let me say up front to my colleagues on the other side,263no one should pretend otherwise today. Today we are here to264study it and look deep into and understand, particularly what265my good friend the Chair of the Committee of the whole brought266forward when he asked for a GAO investigation into this, the267Government Accountability Office, totally nonpartisan.268    We shouldn't distract, we shouldn't dodge, and we shouldn't269run from what this nonpartisan GAO investigation uncovered.270Everytime someone tries to change the subject, it sends a271message to the American people that defending the current272corrupt ACA matters more than defending the families being hurt273by it.274    The worst thing that we could do is pretend this system is275working simply because people rely on it. We shouldn't pretend.276Yes, people rely on it, but it's not good. People rely on it277because they have no other choice very often. We're here to278examine the failures of the system that exists right now and279right here.280    Right now, the nonpartisan Government Accountability Office281has revealed the ugly truth. They tested the ACA and the ACA282failed. The GAO created fake applicants, get this, they created283fake applicants using fictitious identity, missing documents284and questionable personal information.285    The system approved them all anyway. These imaginary286enrollees received tens of thousands of taxpayer dollars month287after month, even though they didn't exist. No verified288identity, no proof of citizenship and no income documentation.289Nothing, nothing at all.290    Think about this, this was not a partisan Republican stunt.291This was a nonpartisan Government Accountability Office, tens292of thousands of your hard-earned tax dollars went sent to293identities invented out of thin air.294    The fraud doesn't just waste tax dollars, it drives295premiums higher for good, honest Americans. This is a program296that paid out roughly $124 billion last year. That's a big297number. If even a small fraction of that is tied to fraud or298improper use, that is a huge number. We're talking about a real299national crisis.300    Let me be clear and I want to be clear on this too, I'm not301calling for the--me, personally, I am not calling for this302entire system to be torn town overnight. That is not the303question for us today. What we cannot do is make these304subsidies permanent forever, because the system is also305damaging American livelihoods and weakening their healthcare306system.307    The real question is how we replace it, how we replace it308and when we replace it in a responsible way that makes it safe309for good Americans. Even with all the problems we have, we have310to make it safe. We have to treat our American people properly.311    The American people are the victims of this corrupt312structure; they deserve a bridge to hold them up while we build313something much better. If a short-term extension--let me be314blunt--is necessary, we should be clear about two things of the315short-term extension: First, it is only to ensure families do316not lose their healthcare in the immediate term.317    Second, the system is not sustainable and cannot serve as a318long-term or permanent solution.319    Those two things we know. We have to take care of the here320and now. We have to take care of them. We've got to do321something short-term with it, but long-term we've got to do322much, much better. Keeping it on autopilot with no reforms or323accountability is purely negligent.324    When you look at the facts of this report, the depth of325negligence becomes undeniable. The nonpartisan Government326Accountability Office also found, and boy get all of this,327there was no proper verification of income, eligibility, or328accuracy in the payments. You couldn't make this stuff up.329    The GAO found Social Security numbers used to enroll330multiple people into one account and they were all one family.331They even found Social Security numbers that belonged to dead332people--you can't make it up--that were being used.333    Think about it, we are letting criminals use dead Americans334identities to scam living Americans out of their healthcare335benefits. If a system cannot tell the dead from the living,336then for sure it's failing and yet insurance companies get337paid, whether the patient is real or fake, while the family who338actually needs care is left fighting denials, delays, and339rising premiums. That's the real world. This is a moral340failure.341    Meanwhile, the Government Accountability Office found that342hundreds of thousands of Americans are being switched into343plans without their knowledge. Imagine a slick con man calling344a vulnerable family and tricking them into it a plan they don't345want, they don't need and actually hurts them. We have that. We346have agents and we have them doing that as we speak. That is347sad.348    It's horrible and it's cruel what these brokers and349agents--not all of them, but these fake ones are doing. The350truth is it isn't just random. The ACA structure has allowed an351industry with dishonest brokers to profit from exploiting352people's confusion and switching people into plans they never353wanted and never asked for.354    Despite that fact, CMS received hundreds of thousands of355complaints last year from people enrolled or moved without356their very consent. The GAO also noticed that CMS has not357updated its fraud risk assessment since 2018. It's simply358unacceptable.359    Today we will hear from experts, thank you for being here.360You studied how fraud spread through the marketplace. We will361hear how insurers profited, while families struggled and were362hurt. It has been great for insurance companies. Man, they have363been making money hand over fist.364    We will assess whether the Administrative Procedure Act is365even being applied in a way that prevents meaningful action366against the waste, the fraud, and the abuse that have plagued367this system.368    Our goal is straightforward here today. We must protect369those who depend on coverage today. I get it. We must also hold370accountable to those who exploited them and exploited the371system.372    We must build a path forward that delivers affordable,373accessible and accountable care for our American people,374because the healthcare system cannot function when the rule of375law is just optional, just optional for agencies, but somehow376it's mandatory for patients.377    With that being said, I now recognize the Ranking Member,378Ms. Crockett.379    Ms. Crockett. Thank you very much, Mr. Chair. I must tell380you that as you spoke, my little pen got to going, as well as a381couple of other people up here, because you said something to382the effect of slick con man, calling and tricking people. I383thought that was profound, because it seems like that's how we384got into this mess, a slick con man has tried to convince385people that healthcare should not be available to everyone.386    That's why right now there are millions of Americans that387have no understanding of what will happen, they don't know if388they are going to lose their health insurance or not. Frankly,389after the big ugly bill was passed, we know that there's going390to be a minimum of 17 million people that will lose their391coverage. Let's talk about these subsidies because that's what392we're here to talk about today.393    In a matter of days Americans across the country will394either begin paying thousands of dollars more per month for395health insurance or losing their coverage entirely. In fact,396more than 350,000 people, all whom live in districts397represented by Republicans on this Committee, will lose their398coverage entirely.399    The 25,000 of Chair Jordan's constituents will lose400coverage, 30,000 of Chair Van Drew's constituents will lose401coverage, 20,000 of Chair Fitzgerald's constituents will lose402coverage. They have the opportunity right now to sign the House403Democrats discharge petition to force a vote to extend the404Affordable Care Act tax subsidies for three years.405    I appreciate that the Chair said that he doesn't feel like406it should be permanent. I appreciate that it sounds like the407Chair also did not have a fix. What the Chair did not say is408whether or not he would sign the discharge petition, which is409only asking for an extension. Considering the fact that the410last time I checked the House, the Senate, and the White House411are run by Republicans, hopefully within the next three years412they could actually find a plan. Nevertheless, I invite my413colleagues on the other side of the aisle to do right, not by414my constituents, but by their own.415    Instead, they've called this performative hearing to try to416district the American people from what is about to hit them--417the fact they have sold out their constituents because Donald418Trump and their billionaire donors told them to do so.419    Their fake concern for fraud, waste, abuse, and their420talking points on lowering the cost of living, well it's all421B.S., every single bit of it. They gave these billionaires422permanent tax cuts, and they are sacrificing the average423American to pay for it. They canceled grants that schools were424using to improve student outcomes.425    They stole resources that farmers in rural communities to426expand local food systems. They took resources from preschool427and early childhood education programs. They dismantled428programs that helped tackle homelessness and assist seniors.429They eliminated medical research grants that have helped430thousands of people battling cancer and Alzheimers.431    They have done all of that but won't even help their432constituents see a doctor, buy food, pay rent, or pay for433childcare. They are OK with corporate socialism, but if you're434a teacher, a police officer, a student, or a sanitation worker,435if you are living paycheck to paycheck, if you can't afford436childcare, if you can't pay your rent, if you can't feed your437children, if you can't afford to pay for college, and if you're438struggling with medical debt, well you're SOL in Trump's439America.440    Congressional Republicans don't believe they have the441responsibility to look out for their constituents; they have442been a reckless rubber stamp for Donald Trump who doesn't even443believe that there's an affordability crisis. In fact, he444thinks affordability is quote, ``a hoax.'' While their445constituents were lining up by the hundreds at food banks446across the country, the President was literally mocking working447class Americans at his Great Gatsby themed Halloween party.448    These people have shown us what they prioritize, and it449isn't stopping fraud, waste, or abuse. In fact, President Trump450has pardoned criminals who have stolen more than a billion451dollars from Americans. The only thing they care about is452making the rich richer at the expense of their own453constituents.454    That's been Donald Trump's focus and congressional455Republicans have gone along with it. This hearing is nothing456more than another Republican attempt to dismantle the457Affordable Care Act. It's performative to distract your458attention away from the fact that they don't have a healthcare459plan. Just concepts of one.460    I do want to make sure that I cover one other thing that461the Chair spoke about. He specifically said that he's concerned462about the fraud. He's not giving us numbers, but I can give you463some numbers. If we're concerned about how much money it may be464costing us because systems are not perfect, we have no perfect465systems, we have always had some level of fraud in anything466that we have because there's no such thing as perfection467walking on this Earth.468    What I can tell you is that I seriously doubt--whatever469level of fraud it is that the Chair is speaking of, I seriously470doubt that it amounts to the over $200 million that the471President is trying to line his pockets with of taxpayer472dollars because he feels like he's been aggrieved. I can473probably tell you that the $40 billion that he sent to474Argentina, I'm sure that $40 billion is probably an amount that475also is a lot larger than the alleged fraud that has taken476place.477    If we are going to talk about being fiscally responsible,478if we're going to talk about how we can keep people insured and479how we can make sure that people are actually going to live to480see another day. If it's really about the concern of fraud,481then maybe rein in the person that is wasting money or deciding482that taxpayers should just line his pockets to the tune of $200483million.484    With that, I will yield.485    Mr. Van Drew. I thank the Ranking Member. Just to remind486everybody, this hearing has is a great number of things we487could debate. Love it, I love to do it. Maybe we will have some488colloquies and debates in the future. We really want to focus489on the problems with the ACA as it exists now. I will get you490some numbers as well.491    With that being said, I will recognize the Chair of the492Subcommittee on the Administrative State, Regulatory Reform,493and Antitrust. Boy, you have got a long name for your494Committee. Mr. Fitzgerald, for an opening statement.495    Mr. Fitzgerald. Thank you Chairman Van Drew. Thank you to496our witnesses for being here today.497    Let me set the record straight, ObamaCare is a complete498failure. We are a decade and a half into the so-called Patient499Protection Affordable Care Act, a bill that was promised to the500American people as a solution to lower healthcare spending.501Patients have not been protected and healthcare has certainly502not become more affordable.503    Since ObamaCare was fully implemented in 2014, healthcare504premiums have risen 129 percent, over three times the rate of505inflation during the same period. Additionally, premium506subsidies have risen right along with the premiums.507    In 2014, subsidies cost the taxpayers $20 billion. In 2025,508that number ballooned to $130 billion and $110 billion increase509in 11 years. If patients and taxpayers have not benefited from510Obama-Care, who has? Well, unfortunately, it is the large511insurance companies.512    Since ObamaCare was signed into law, the weighted average513of health insurers stock prices are up over 1,000 percent, far514exceeding the S&P 500 during it that period. Even a smaller515time period since the creation of enhanced premium tax credits516in 2021, the Joint Economic Committee pointed out that both the517Biden COVID premium subsidies do more to improve the financial518outcomes of large health insurers than to reduce healthcare519costs for Americans.520    The reality is Democrats created a boondoggle that has521funneled billions of tax-payer dollars directly from the U.S.522Treasury to large health insurance companies, while at the same523time added hundreds of billions to our national debt, delivered524few results for the American people, and drove premium and525premium subsidy costs far beyond inflation.526    The Democrats demand that we keep injecting hundreds of527billions of dollars into the very system they told us would528make healthcare more affordable. Despite clear evidence, they529are throwing more money at their failed system that is530producing harmful results for Americans.531    Wisconsin commonsense will tell you that trying the same532action over and over again while expecting a different result533is insane. Aside from the insanity of Democrats position on534extending ObamaCare premium subsidies, let's talk about the535subsidy program integrity or the complete lack thereof. The536enhanced subsidies have given rise to rampant fraud, as we'll537hear from Mr. Bagdoyan, the GAO found significant instances of538fraud in the premium tax credit program.539    The system allows insurance companies to effectively get540away with stealing from the Treasury. The brokers are paid by541insurance companies for each enrollment and are therefore542incentivized to enroll as many people as possible. Whenever a543person is enrolled or switches their plan, the health insurance544company receives a subsidy, and the broker receives a kickback545from the health insurance company. The GAO found that in 2023546there were over 7,000 instances of an already deceased person547enrolling in a subsidized health insurance plan.548    The GAO has also found in 2023 there were over 19,000549instances of a dead person's Social Security number being used550to enroll a living person in a subsidized health insurance. In551total, for just one year the GAO found $21 billion in552unreconciled subsidies. That number only includes citizens553using Social Security numbers. It doesn't include noncitizens554who received subsidized care.555    Independent research by the Paragon Health Institute556estimates as many as 6.4 million enrollees miss represented557their income to qualify for the full subsidized ObamaCare558premiums. Paragon estimates the cost to taxpayers from this559improper enrollment will exceed $27 billion in 2025 alone. This560is not incidental. It is systematic risk to a program that has561been ripe for abuse from day one. I'm sure our witnesses will562elaborate further on that point.563    Thankfully, Republicans have taken action to combat this564ObamaCare fraud. In H.R. 1, Republicans ensured only U.S.565citizens could receive premium tax credits. We also removed the566cap on repayments to the Federal Government for excessive567subsidies and added stricter eligibility verifications to568ensure people do not receive generous subsidies before their569eligibility is determined.570    In June of this year the Trump Administration, the571Department of Health and Human Services issued a rule meant to572combat waste, fraud, and abuse in ObamaCare subsidies. The rule573would have gone into effect on August 25, 2025, but a Biden-574appointed Federal judge issued a stay that prevented most the575fraud protection measures in the rule from going into effect.576    The judge's opinion was legally and factually ridiculous.577The Trump Administration rule would have required individuals578enrolled in fully subsidized plans to confirm their eligibility579or pay $5, a $5 fee. This judge decided that this easily580avoidable fee constituted an illegal premium.581    The judge also criticized Paragon data analysis and said582the CBO study cited we're too old. We now know that the CBO's583analysis is up to date, consistent across the history of584ObamaCare and consistent with Paragon's analysis.585    In closing, let me just say that Republicans are committed586to real reforms that would lower premiums and give patients587more choice over their healthcare. Some of our witnesses are588prepared to discuss solutions that could do just that.589    The ObamaCare as a whole, it's broken. After 15 years, it's590broken. Despite generous taxpayer subsidies, it has not made591healthcare more affordable, it has not shown evidence of a592program that has any integrity and it has only further enriched593large health insurance companies. It is truly the un-Affordable594Care Act. Now is the time to wheel our healthcare system back595into the operating room and perform surgery. Not continue596putting billions of dollars and useless Band-Aids on a failed597system.598    Thank you, Chair. I yield back.599    Mr. Onder. [Presiding.] I now recognize the Ranking Member600of the Full Committee, Representative Raskin.601    Mr. Raskin. Thank you very much, Mr. Chair and thank you to602all the witnesses for joining us today.603    In three weeks, the ACA's tax credits expire. We've got a604simple choice in Congress, we can give millions of American605families more affordable health insurance by extending the ACA606tax credits or we can force on them drastic premium increases,607that's the choice. Any other rhetorical exercise today is a608diversion and a distraction.609    My colleagues want us to change the subject. They want to610talk about the problem of fraud, the perennial problem of611fraud. There are lots of things we can say about that and maybe612we can make some progress on it, but that's a completely613different issue.614    Fifteen years can ago, the ACA passed and this historic615achievement gave millions of Americans who had been priced out616of healthcare access actual access to health insurance into it617lifesaving medical care. With the enhanced premium tax credits618passed by Democrats, coverage became more affordable for tens619of millions of people who did not have access to healthcare,620but now President Trump and our colleagues want to turn the621hands of the clock back, they want to make health insurance622more expensive for the American people.623    They want to allow tax credits for health insurance to624expire. They have a solution to the affordability crisis in625America which they call a con job and a Democrat hoax for which626hundreds of millions of Americans live with every day. Their627solution is to increase health insurance premiums for 22628million Americans by 75 percent on average.629    For many Americans their monthly premium payments are630doubling or tripling. A 60-year-old in my district who makes631$82,000 a year will see their premium increase jump from $581-632$1,552, a stunning 167 percent increase. A person making the633same salary in our distinguished Chair Jordan's district will634see a 248 percent jump in insurance rates with a monthly635premium increasing from $581-$2,022.636    Thanks to the Kaiser Family Foundation for breaking these637down according to congressional districts so Members of638Congress can understand what's about to happen to our own639people.640    Well, our people are looking at working with no health641insurance, sending their kids to school with no health642insurance, trying to avoid getting the measles under the643leadership of Secretary Kennedy at HHS with no health644insurance. Our colleagues just say, let them pack the emergency645rooms, let them take two conspiracy theories and call me in the646morning.647    We talk about healthcare for Americans and they change the648subject to talk about fraud. That's an old trick. When we talk649about Social Security, they talk about fraud. When we talk650about Medicare, they talk about fraud. When we talk about651Medicaid, they talk about fraud.652    All because they oppose these programs for the people, not653the fraudulent parts created by criminals who we need to chase654down and prosecute, but rather the fairness parts created by655Congress for the American people. Now, we talk about extending656health insurance and they want to talk about fraud.657    Well, why does President Trump have any standing to lecture658anyone about fraud? Think about that for a second. He was659criminally convicted by a unanimous juries of his peers on 34660different felony counts of falsifying business records to661conceal illegal payments he made. He was found guilty of662defrauding the State of New York by lying about real estate663values and he owes hundreds of millions of dollars in ill-664gotten gains to the people of New York. Now, he wants to665distract us from their sweeping attack on the healthcare rights666the of the people by claiming to be enemies of fraud. What a667joke.668    The President just used his pardon power to commute the669sentence and forgive the fines of a guy, a fellow criminal670convict who defrauded the government of $1 billion by671exploiting nursing homes and other senior care healthcare672facilities. One of the biggest frauds ever committed in the673history of the United States he pardoned more than a dozen674criminals who stole hundreds of millions of dollars from675Medicare and Medicaid for the American people. He pardoned676criminals who abused elderly patients and subjected them to677unnecessary treatment that were described by the prosecutors in678those cases as horrific and barbarian.679    If anyone wants to challenge me on any of these facts, I680will read to you from the cases. I will give you the681documentation. You might prefer not to look at who Donald Trump682is pardoning but that does not mean it's not happening.683    Not only did he free unrepentant incorrigible fraudsters684over the last 11 months, but he also relieved them of their685fines and the restitution that they owed to pay their victims.686A total right now of more than $1.3 billion and running. Before687Trump, all the Presidents had made the people actually payoff688their fines and their restitution, but not this President.689    A few weeks ago, he pardoned the former president of690Honduras, Oscar Hernandez who brought in, check this out, 400691tons which translates to 800,000 pounds of cocaine, billions of692individual doses of cocaine into our country to quote, as the693President of Honduras said, ``to shove up the noses of the694gringos,'' as he so sweetly put it. In our alleged American695first President pardoned this sick, fascist, anti-gringo, drug696dealer while his war secretary was blowing alleged drug boats697and killing 84 people with no declaration of war by Congress698and no due process, all allegedly in the name of stopping699drugs. What a joke.700    The President pardoned Ross Ulbricht, the mastermind behind701the dark web platform Silk Road that was used by drug dealers702to sell $214 million worth of narcotics. That guy was sentenced703to life in prison with no chance of parole. Yet, after Trump704pardoned him on day one of his administration, this guy is now705back at work, a completely unrepentant criminal and a threat to706public safety.707    We are being lectured by newly minted antifraud fighters,708who utter not a word about any of these pardons of drug709traffickers and organized criminals, but people who said710nothing when President Trump illegally sat 17 inspectors711general in our government, the very people who were tasked with712rooting out fraud, abuse and corruption in our government.713    In 2024, they saved $71 billion alone. They have been714sacked and either not replaced or replaced with a bunch of715political hacks. Ten million Americans have already lost their716health insurance because of this obscene ugly bill. A new CMS717rule will rip care from 1.8 million Americans. Their plan to718kill the ACA tax credit would mean another four million719American families will no longer have health insurance.720    Fraud is a criminally wrong and a serious threat to the721well-being of our people. No one is doing more to stop it than722the Democrats who built these programs that the fraudsters are723going to jail for ripping off for being pardoned by the724convicted fraudster President.725    Every dollar stolen is a threat to the infrastructure of726our safety net. Yes HHS, the Centers for Medicare and Medicaid727Services DOJ must do a lot more to fight it. We must all fight,728not pardon and exonerate the criminals and fraudsters who steal729from the American people.730    The way to fight fraud is with targeted antifraud measures731not to destroy the public programs that actually serve the732American people. They want to get rid of healthcare that we733want to protect, and we want to get rid of the fraudsters that734they want to pardon done. Choose your side.735    I yield back to you, Mr. Chair.736    Mr. Van Drew. [Presiding.] I thank the Ranking Member.737    I would like to submit with unanimous consent an article to738go into the record. The article is titled, ``Patient Protection739and Affordable Care Act Preliminary Results,'' and it just740details the Ranking Member asked for numbers, 19,000 in741instances of a dead person's Social Security number being used,742160,000 applications in plan year 2024 that had unauthorized743changes though brokers, 66,000 Social Security numbers in 2024744that were used for over 365 days illegally. I could go on and745on with the numbers of course, but I'd like to submit that.746    I'd also like to say again, I want to remind everybody that747this hearing is about the Affordable Care Act. If you think748it's perfect, if you think there's no fraud, if you think that749the Government Accountability Office is lying, then you should750say so. I hope that everyone on the other side of the aisle has751read this report from one end to the other. It is a nonpartisan752report. It's not a Republican report.753    With that, I recognize the Chair of the Full Committee, Mr.754Jordan.755    Chair Jordan. Thank you, Mr. Chair.756    If you like your plan, you can keep your plan. If you like757your doctor, you can keep your doctor and premiums will go758down. That's what the Democrats told us when they started this759thing. They were zero for three. Now, they are telling us oh,760the cliff that they created, which is going to happen in 21761days, if we don't extend the subsidies, the whole world is762going to end. Subsidies increase costs, choice in competition763lower costs. Subsidies drive up premiums, choice in competition764lower premiums. No, no, no, they just want to keep doing the765same thing.766    Now, I understand there is a cliff coming and we should767address that, but we should address it in the contact of768actually doing something that brings down premiums for all769Americans. I think they said 12 million, 22 million, different770numbers. Well, there are 340 million and some people in this771country that got to deal with healthcare. We would like the772premiums to come down for families across the Nation.773    Then they said I think the Ranking Member of the774Subcommittee, the Senator from Texas said, ``there's always775some level of fraud.'' I think the Ranking Member of the Full776Committee is talking about perennial fraud, as if it's OK.777    Have they read the report? A $21 billion in unreconciled778subsidies were paid to insurance companies in one year, 7,000779times dead people enrolled, that's a miracle, holy cow. The78019,000 instances of a dead person's Social Security number781being used to enroll someone who's alive. That's crazy too. One782time a Social Security number was used to enroll in 125783policies, different policies in one year, that's phenomenal.784That's just perennial. That's just your run of the mill, garden785variety fraud I guess, according to the Democrats.786    We didn't think that's the case. We would like to have787healthcare where there is choice in competition, where you788don't have this kind of fraud, and you don't have these endless789subsidies going on forever so that premiums actually come down790for American families. I look forward to hearing from our791witnesses to talk about those things that will make a792difference for the families we all get the privilege of793representing. I yield back.794    Mr. Onder. [Presiding.] Without objection, all other795opening statements will be included in the record.796    We will now introduce today's witnesses.797    Mr. Seto Bagdoyan is a Director of audit services in the798Government Accountability Office, Forensic Audits and799Investigative Service Division. In FAIS he leads audits of800major Federal programs focusing on program integrity and risk801management issues.802    Dr. Brian Blase is the Founder and President of Paragon803Health Institute, a nonprofit organization that works to804improve public and private health. He previously served as805Special Assistant to the President for economic policy on the806White House's National Economic Council.807    Dr. Ge Bai. Dr. Bay is a Professor of Accounting at the808Johns Hopkins Carey Business School, and Professor of Health809Policy and Management at the Johns Hopkins Bloomberg School of810Public Health. Her research focuses on healthcare accounting,811finance, and policy.812    Professor Zack Cooper. Mr. Cooper is an Associate Professor813of Public Health and an Associate Professor of Economics at814Yale University. His research focuses on healthcare spending815and competition in the hospital and insurance markets.816    We will begin by swearing you in. Would you please rise and817raise your right hand?818    Do you swear or affirm under penalty of perjury that the819testimony you are about to give is true and correct to the best820of your knowledge, information and belief so help you God.821    Mr. Van Drew. Let the record reflect the witnesses have822answered in the affirmative. Please know that your written823testimony will be entered into the record in its entirety.824Accordingly, we ask you to summarize your testimony in five825minutes.826    Mr. Bagdoyan, you may begin.827828                   STATEMENT OF SETO BAGDOYAN829830    Mr. Bagdoyan. Thank you, Mr. Chair, Chair Fitzgerald, Chair831Jordan, Ranking Member Crockett, and Ranking Member Raskin, I'm832pleased to highlight today initial results of selected aspects833from our ongoing review of the ACA APTC program, a program's834complex structure, high levels of participation spending and835generally weak controls underlie its inherent risks for fraud.836This regard APTC spending totaled $124 billion in 2024, making837it highly attractive to fraudsters.838    To be clear, our review focuses on identifying indicators839of potential fraud. This is very important to understand today,840in ACA rather than determining the extent of fraud or841evaluating its policy or viability aspects. Overall, our842current bottom line is threefold, initial results are843consistent with those from similar work over 11 years ago.844    Risk conditions haven't improved over that time, in fact845risks persist and could be significant. The program faces two846principle risks, integrity risk from ineligible and eligible847applicants perpetrating enrollment or subsidy fraud and848consumer harm risk from brokers and agents taking unauthorized849actions, jeopardizing health coverage.850    More specifically, three principled points were worth851noting. First, CM's approach to addressing ACA's fraud risk is852short on fundamentals. For example, its capacity to manage risk853is weak, including a generally lenient posture regarding854controls, obsolete and incomplete fraud risk assessments, the855latest dates from 2018 and no comprehensive strategy to856proactively counter risk.857    Capacity hasn't kept up with significant program changes,858including growth and enrollees and spending, frequent shifts in859enrollment controls and the expanding role of brokers and860agents in facilitating enrollment.861    Second, covert testing of enrollment controls indicates862that weakness is from similar testing over 11 years ago863persist. The 18 of 20 of our ghost applicants using fake864information and documents secured ongoing coverage and865subsidies totaling $10,000 a month, while many application-866related discrepancies remain unresolved.867    Third, extensive data analyses flagged multiple indicators868of potential fraud. For example, the overuse of SSNs. Multiple869policies attached to a single number. The 66,000 instances870occurred in 2024, with over 194,000 policies attached to those.871That is twice two the 2023 level.872    The most overused SSN from 2023 has 127 full year and part873year policies attached with annualized subsidies totaling874$5,767. Matches with SSAs full death file, deceased individuals875associated with active policies of 58,000 matches in 2023, and876partial results show 26,000 subsidies, carry subsidies totaling877$94 million.878    No initial evidence of reconciliation of subsidies, Social879Security gaps between pertinent enrollment and tax data880suggests that APTCs totaling $21 billion in 2023 were881potentially not reconciled as required. This represents 32882percent of all APTCs where applicants included in SSNs and883about 23 percent of total APTC spending in 2023.884    Also, a potentially unauthorized broker agent activity or885as we call it volleying, this involves changes to brokers and886agents of record or insurance plans or new coverage initiated,887all without consumer knowledge or consent. There were 160,000888instances in 2024, that is five times the 2023 level.889    Unauthorized changes jeopardize coverage and could result890in consumer harm. For example, curtailed access to providers or891medications.892    In closing, initial results show ACA's risks persist,893undermining program integrity and jeopardizing consumers.894However, CMS has not acted decisively and timely to counter895them. CMS must acknowledge risks exist and are immediately to896take them seriously and bolster its capacity to address them.897    This concludes my opening remarks. Thank you.898    [The prepared statement of Mr. Bagdoyan follows:]899    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]900901    Mr. Onder. Thank you, Dr. Bagdoyan. Mr. Blaze.902903                  STATEMENT OF DR. BRIAN BLASE904905    Dr. Blase. Mr. Chair, Chair Fitzgerald, Chair Jordan,906Ranking Members Crockett and Raskin, and the Members of the907Committee. Thank you for the opportunity to testify this908afternoon.909    The failures of the Affordable Care Act are well-known,910canceled health plans, soaring premiums and deductibles, lost911doctors and narrow networks. The law entrenched in inefficient912insurance dominated health sector by sending massive subsidies913straight to insurance companies.914    A new Joint Economic Committee report found that the main915winners of the ACA subsidies are health insurers whose stock916prices have soared. My testimony today will focus on one917profound and expanding failure, massive fraud and abuse in the918exchanges. The GAO's work shows how vulnerable the program is919to fraud, with 96 percent of fake applications enrolled in920subsidized coverage. Paragon's work shows the staggering cost.921Our research grew out of a single conversation.922    In May 2024, I testified in Texas, a State Senator asked me923about techniques being used to inappropriately enroll people in924fully subsidized ACA plans. I responded that there were large925incentives for abuse, but that I did not know the scale. On926returning, I asked my team to do a simple analysis, compare the927number of people enrolled claiming income between 100-150928percent of the poverty level to the number of people who would929be eligible for a plan with that income.930    Under a COVID-era subsidy boost, the ones set to expire931after this year, coverage was made fully subsidized for people932who claimed income in that category. Using conservative933assumptions, we found five million more people enrolled in that934income category than were eligible in 2024. Nearly half of all935enrollees claimed income in this narrow band. More than half of936them were not eligible.937    In 2024, Federal spending on ineligible enrollees likely938exceeded $20 billion. We published our findings in a paper939entitled, ``The Great ObamaCare Enrollment Fraud.'' Others940replicated Paragon's work and they got the same result.941Exchange enrollment had surged in large part because942eligibility rules were ignored. Improper and phantom enrollment943took off.944    After ignoring the problem for two years, the Biden945Administration's actions to penalize some brokers were too946little, too late. As proof of their failure, improper947enrollment surged in the last enrollment period on President948Biden's watch. After open enrollment in 2025, there were 6.4949million people enrolled in fully subsidized plans and were not950no eligible at a cost of $27 billion. Many enrollees were951victims, signed up without their knowledge. Some lost plans952they liked, and others now face tax penalties.953    One customer service agent said that half of people signed954up had no idea that they were enrolling in health insurance. A955new study from the Competitive Enterprise Institute, shows two956times more people enrolled in exchange plans than report being957enrolled in those plans. Automatic reenrollment has simply958shuffled improper eligibility determinations from one year to959the next.960    In 2025, 45 percent of all exchange enrollees took no961action and were automatically reenrolled. Given widespread and962proper enrollment, many enrollees unaware of their coverage we963would expect many to never use their plan. The Biden964Administration didn't release information on zero claim965enrollees. Fortunately, in August, the Trump Administration966did. What did we find? A surge in enrollees had who never used967their plan, no doctor visit, no prescription, and no lab work.968    In 2024, nearly 12 million enrollees did not use their plan969a single time, up from fewer from four million in 2021.970Overall, 35 percent of all exchange enrollees never used their971plan and 40 percent of fully subsidized enrollees did not have972a single plan. Zero claim exchange enrollees are more than973double what occurs in a normal health insurance market and are974double the rates before the COVID-era subsidy expansion. There975are unquestionably millions of phantom enrollees in the976exchanges. Federal taxpayers sent more than $35 billion to977insurers in 2024 for people who never used their plan.978    This one Big Beautiful Bill took some important steps to979improve exchange program integrity. The best way to reduce the980fraud and waste is for the COVID-era subsidy boost to expire as981scheduled. That would still leave in place extremely generous982subsidies. It would cover the vast majority of premiums and983grow more generous over time on autopilot.984    Thank you. I look forward to answering your questions.985    [The prepared statement of Mr. Blase follows:]986   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]987988    Mr. Van Drew. [Presiding.] Thank you very much and now we989will move on to Dr. Bai.990991                    STATEMENT OF DR. GE BAI992993    Dr. Bai. Chair, Ranking Members, and the Members of the994Subcommittees, thank you for the honor of testifying. My views995do not represent Johns Hopkins or its affiliates.996    First, in a study soon to be published in JAMA Health997Forum, my colleagues and I found that from 2014-2023, a 10-year998period, ObamaCare premium subsidies grew from under $20999billion-$83 billion. This year it is going to be $130 billion.1000    Second, for subsidized plans the taxpayers' share rose from100129 percent--74 percent.1002    Third, unsubsidized plans lost appeal. Their marketshare1003shrank about a quarter. Taxpayers spent hundreds of billions of1004dollars on ObamaCare subsidies, but did the money go to the1005right place? GAO, DOJ, Paragon institute, and others have found1006the answer is no.1007    What they found is actually only a tip of the iceberg.1008Fraud is like cockroach infestation. Once we see one, there are1009more.1010    Subsidy fraud happened because government agencies have1011little incentive to care when they spends taxpayer money. The1012insurers and the brokers have no incentive to stop it. As we1013discuss subsidy, we should always remember the root of the1014problem is the unaffordable, low-value ObamaCare itself. It was1015originally sold to American people as affordable.1016    President Obama promised premiums would go down by $2,500.1017At that time, many economists already predicted unaffordability1018as we are experiencing today.1019    Soon numerous regulations to ObamaCare damaged both the1020provider market and the insurance market. Consolidation,1021stagnation, high prices and high premiums follow. Some people1022blame private companies, but the private companies are merely1023responding to the very incentives created by ObamaCare. Others1024blame FTC for consolidation, but by the time merger acquisition1025transactions reach FTC, it's already too late. ObamaCare has1026made the soil so toxic that only large entities can survive.1027That is why ObamaCare is both a taxpayer fraud and a consumer1028deception.1029    The COVID-era enhanced subsidy used the taxpayers to lure1030higher income consumers LOEs into unaffordable plans that they1031would not have bought otherwise without addressing any1032underlying unaffordability. Also, set them up as political1033pawns for another future premium cliff. This is also consumer1034deception and taxpayer fraud.1035    The ObamaCare defrauds taxpayers three times. First, paying1036for expensive premium subsidies. Second, paying those1037fraudsters. Third, paying a high price in premiums for their1038own healthcare caused by ObamaCare. Except for a small number1039of people who benefited critically and financially from1040ObamaCare all Americans lose.1041    Patients are deprived of affordability and excess that a1042free market could have brought. Physicians, entrepreneurs1043innovators, and American workers can reach their productivity1044potential. Our employment, the economy and global leadership1045suffered.1046    ObamaCare fraud was created by Congress and can only be1047fixed by Congress.1048    First, open the book and let the public help detect and1049deter subsidy fraud.1050    Second, most importantly, invigorate healthcare markets,1051let the patient control their healthcare dollars. Let providers1052compete and level the playing field. Let the insurers then1053offer plans that consumers actually want and deregulate and1054unburden--hundreds and millions of Americans want better health1055and a lower price, confidence builders want to compete,1056innovate, and earn returns. Their hands are tied by ObamaCare.1057    Member of Congress please unleash American dynamism into1058healthcare and bring true access and affordability to all.1059Thank you.1060    [The prepared statement of Ms. Bai follows:]1061   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]10621063    Mr. Van Drew. Dr. Bai, thank you. Next, we will ask1064Professor Cooper. Thank you for being here.10651066                    STATEMENT OF ZACH COOPER10671068    Mr. Cooper. Thank you. Good afternoon, Chair Jordan, Chair1069Van Drew, Chair Fitzgerald, Ranking Member Raskin, and the1070Members of the Committee. My name is Zack Cooper. I am a health1071economist and Professor at Yale University, where my reach1072focuses on the understanding the drivers of healthcare spending1073growth in the United States and how healthcare spending impacts1074the wider economy.1075    Today I'm testifying here on my own behalf, not on behalf1076of Yale University and the views I am going to express are my1077own. I really appreciate the opportunity to be here.1078    A decade ago in my health economics class, when I taught my1079students about the relationship between health insurance,1080health and mortality, what I told them was health insurance is1081a fundamentally a financial tool. I was wrong. A decade later,1082my views have changed because the research has changed. The1083clearest evidence we have now is that enrolling an American in1084a Affordable Care Act plan on the exchanges make them less1085likely to die.1086    The enhanced ACA subsidies that help approximately 221087million people in this country's purchase plans are set to1088expire at the end of year. People getting health insurance on1089the exchanges are farmers, they are ranchers, they are cooks in1090small restaurants, they are contractors who run their own1091businesses. If those subsidies end, the premiums people pay are1092going to skyrocket and approximately four million people are1093going to lose their coverage. Extending those subsidies1094matters.1095    If you focus only on whether the subsidies remain in place,1096we're having the wrong conversation. The real problem we're1097facing in this country is the underlying cost of healthcare.1098The growth in healthcare spending is what makes the subsidies1099necessary in the first place. It's driving up premiums for1100employer sponsored health insurance coverage; it is driving up1101premiums on the exchanges.1102    Rising healthcare spending is crushing families, it's1103slowing wage growth, and it is reducing employment for1104Americans earning less than $100,000 a year who are working1105outside the healthcare sector. As I've said, healthcare1106spending is literally crushing the American Dream.1107    Next year premiums from employer sponsored plans are1108expected to increase 10 percent, premiums on the exchanges are1109projected to rise 18 percent. The premiums growth is largely1110driven by the growth we're seeing at hospital and provider1111prices. I want you to think of mergers, staffing shortages, and1112tariffs on medical devices. Then, there is the increasing use1113of GLP-1s.1114    As the Congressional Budget Office has said, the exchange1115plans are seeing a sharper increase in premiums in the employer1116plans precisely because of the uncertainty over the expiration1117of the ACA subsidies. Insurers had to factor in the risk that1118if the subsidies expired, healthier people would be less likely1119to buy insurance on the exchanges, which could lead to sicker1120insurance risk pool.1121    Price growth is the biggest problem we're facing. Over the1122last two decades, prices in the hospital sector as an example1123have grown faster than prices in virtually any other sector of1124the U.S. economy. We've seen huge numbers of hospital mergers,1125mergers of hospitals and physician practices, mergers of1126pharmacy benefits managers. This is what the problem is that1127we're facing. There are practical steps Congress could take to1128address this.1129    The first is introducing so-called site neutral billing.1130Medicare often pays more, sometimes double the identical1131services when they are delivered in a hospital versus an1132independent physician's office. This encourages content1133consolidation, it raises prices, and it drives up premiums.1134    The second is increasing funding for antitrust enforcement.1135Increasing enforcement budgets turns out to be cost effective1136for the Federal Government. It makes a difference.1137    Finally, we need to begin serious exploration of larger1138healthcare reforms, they could be implemented over the next1139decade. During the shutdown, one idea briefly surfaced was a1140bipartisan commission to study ways to lower healthcare1141spending in this country. That commission shouldn't be a1142footnote, its' essential, healthcare costs are crushing your1143constituents.1144    Now, a brief word on fraud, as the GAO report makes clear,1145there is a fraud risk on the exchanges. In 2024, CMS took1146action to spend 850 agents and brokers from the federally run1147marketplaces because they had a reasonable suspicion of fraud.1148    We shouldn't tolerate fraud. We should work tirelessly to1149stop it. However, my review or my reading of the literature is1150that fraud is not the primary driver of the growth we're seeing1151right now in healthcare spending. What's really driving premium1152growth is growth in healthcare providers' prices.1153    We as a country have failed to take the necessary steps to1154make healthcare affordable for people in this Nation. My1155insurance is good. I'm going to assume that most of the folks1156in this room have pretty good insurance coverage.1157    The reason that subsidies are important is because lower-1158and middle-class, lower- and middle-income Americans shouldn't1159be left uninsured or stuck paying astronomical premiums because1160policymakers, healthcare purchasers like employers have failed1161to make the tough choices that need to be made to rein in1162healthcare cost in this country.1163    Subsidies alone aren't a solution. What they do is buy us1164time. The point is to use the time that they provide to build a1165system where coverage is affordable because care is affordable.1166I'm delighted to talk about the steps we could take as a1167country to make healthcare more affordable.1168    Thanks for the opportunity to testify, and I look forward1169to your questions.1170    [The prepared statement of Mr. Cooper follows:]1171   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]11721173    Mr. Van Drew. [Presiding.] I thank the gentleman. I am now1174going to recognize the Ranking Member for his statement.1175    Ladies and gentlemen, I want to apologize a little bit. We1176cannot control what happens on the floor. Things took much1177longer today. We're going to have another voting session.1178    We are going to attempt to have two people, to be as fair1179as we can, on either side of the aisle speak, and that's going1180to wrap the hearing up. Otherwise, we'd have to come back, and1181everybody has previous commitments.1182    Please accept my apology in advance to Members on both1183sides of the aisle and to the witnesses. I am truly sorry about1184this. I was looking forward to a robust, thorough, full-1185throated debate on this. I really was. It didn't happen.1186    The gentleman from Maryland.1187    Mr. Raskin. Mr. Chair, thank you very much.1188    Professor Cooper, let me just pick up with what you just1189said. You testified that it was actually growth in healthcare1190prices and insurance prices that is really driving the cost1191increases, not so much fraud, but then you mentioned that there1192were 850 insurance agents and brokers who were suspected of1193fraud, waste, and abuse who had been removed by the Biden1194Administration.1195    Then, this is somewhat of a bombshell, tucked in the GAO1196report--all 850 of those shady insurance agents and brokers1197accused of fraud were allowed back into the marketplace that1198they were suspected of defrauding.1199    Did I hear that right?1200    Mr. Cooper. That's my understanding, yes.1201    Mr. Raskin. Well, I know you don't think fraud is the big1202deal here, but that can't be a sound practice, can it be, to1203have the Trump Administration restoring potentially fraudulent1204brokers and agents to the government, to the program?1205    Mr. Cooper. If your goal, Congressman Raskin, is to reduce1206fraud, that's not what I would do.1207    Mr. Raskin. Mr. Bagdoyan, let me come to you. You identify1208in your report potential risks for fraud in the ACA program.1209Just to be clear, are those kinds of potential risks you1210identified unique to the ACA program or are those potentially1211present in all healthcare programs or all government programs?1212    Mr. Bagdoyan. That's a great question. Thank you for asking1213it.1214    The indicators for identity proofing and eligibility1215determination, those are the key ones that pretty much run the1216gamut of any kind of a--1217    Mr. Raskin. If I could, and just to followup on that, this1218also is not something new that's taking place now or was not1219new in the last administration.1220    You identified that that potential risk of fraud went back1221to 2014, right?1222    Mr. Bagdoyan. That's when we first started this work, sir,1223yes.1224    Mr. Raskin. OK. It seems to me that really this hearing1225should be about what is the administration doing to confront1226this risk of abuse that has been in place for more than a1227decade.1228    Can anybody answer what Secretary Robert F. Kennedy, Jr.,1229at HHS and men mutt Oz are actually doing about the potential1230kinds of fraud that go back to 2014? I don't know.1231    Dr. Blase, can you answer that?1232    Dr. Blase. Thank you for that question, Congressman.1233    The administration made a final rule on exchange program1234integrity that included a lot of policies that would reduce the1235fraud.1236    One of them was to have a $5 minimum payment to review1237people's eligibility prior to continuing enrollment to address1238issues with auto-reenrollment. That rule was stayed by one1239judge so it wasn't in effect.1240    The reconciliation bill actually has three important1241provisions to address some of the fraud. It will require1242enrollees starting in 2028 to take action prior to being auto-1243reenrolled. The insurer won't be able to just keep them in the1244plan. The enrollee will have to do something.1245    Mr. Raskin. Yes.1246    Dr. Blase. It addresses--the Biden Administration opened up1247enrollment for anyone claiming income in a certain category at1248any point in the year. The GAO report showed just how1249vulnerable the exchanges were. It's called the special1250enrollment period--significantly opened up the opportunity for1251fraud.1252    Mr. Raskin. Let me just stop you because I'm running out of1253time here.1254    The United States District Court in Maryland struck down1255that rule, stayed enforcement of that rule, as I understand it,1256right? That was based on the report that you prepared. Is that1257the Paragon Report? Am I getting that right?1258    Dr. Blase. No. There were commentators that cited the1259Paragon Report. The judge in his decision said that CMS didn't1260do an adequate explanation of describing the policy. There was1261also another judge in a Massachusetts Court that looked at the1262same issue and threw out the challenge.1263    Mr. Raskin. Here's what the Court said, this is not really1264my field, but it said:12651266        Defendants are not free to support a rule change with data of1267        questionable validity and limited relevance and then refuse to1268        engage with commenters' reasonable concerns if the data fails1269        to support the conclusion the agency drew from the data.12701271The Court essentially rejected the underlying methodology and1272the data that was collected.1273    Dr. Blase. Well, the Court didn't look at the Paragon1274Report. The court looked at the commentators that wrote about1275the Paragon Report.1276    I can tell you, Congressman, CBO has cited that report in1277their work. CBO has estimated improper enrollment in the1278exchange, and CBO's estimates are consistent with what Paragon1279predicts.1280    Mr. Raskin. OK. Well, thank you for that. I just hope that1281the administration will take the problem of fraud and abuse1282seriously and work on it because the tools exist now.1283    Thank you for your patience, Mr. Chair, and I yield back to1284you.1285    Mr. Van Drew. I thank the Ranking Member. I'm just going to1286ask a couple of questions quickly, because I want a couple1287other Members to be able to speak. Really quick to all of you,1288is the GAO a nonpartisan organization? Mr. Bagdoyan?1289    Mr. Bagdoyan. Absolutely.1290    Mr. Van Drew. Dr. Blase?1291    Dr. Blase. Yes.1292    Mr. Van Drew. Nonpartisan.1293    Dr. Blase. Yes.1294    Mr. Van Drew. It's not a Republican organization.1295    Dr. Bai? Dr. Bai?1296    Ms. Bai. Yes.1297    Mr. Van Drew. Yes? OK, thank you. Professor Cooper?1298    Mr. Cooper. Yes.1299    Mr. Van Drew. OK, thank you.1300    Did the GAO--Dr. Blase, I'll ask you this question--say1301that dead people are receiving benefits?1302    Dr. Blase. They did.1303    Mr. Van Drew. Did the GAO say that fraudsters, brokers, and1304agents were misusing the system, getting benefits themselves1305and moving people into plans they don't want?1306    Dr. Blase. Yes. The GAO report showed significant1307vulnerabili-1308ties with the exchange.1309    Mr. Van Drew. Did the GAO show, nonpartisan, that money was1310going to Social Security numbers, not families, to multiple1311numbers of Social Security numbers from multiple individuals,1312and they were receiving subsidies and it couldn't be possible?1313    Dr. Blase. Yes. Tens of thousands.1314    Mr. Van Drew. Tens of thousands.1315    Dr. Blase. Yes.1316    Mr. Van Drew. OK. That's my first point and the point I1317wanted to make as well. I think that we have--you say--can you1318please--1319    Mr. Moore. Yes, Mr. Chair. I'd like to submit for unanimous1320consent. For the record, this article is titled ``The Great1321ObamaCare Enrollment Fraud.'' This is a Paragon Health1322Institute paper led by our witness Brian Blase.1323    The paper takes a deep dive into the Affordable Care Act1324and explains how it is susceptible to fraud, opening the door1325to insurance brokers to take advantage of the Marketplace.1326    Mr. Van Drew. I thank the gentleman. Without objection.1327    I just want to say briefly and then we're going to move on1328to some other questions, that's what this hearing is about, and1329I wish we had more time.1330    I know people have different visions of what healthcare1331should be in the United States of America, but we have a system1332now that's wrought with fraud that doesn't work, that isn't1333right, that's taking money from good American people and giving1334it to people who are fraudulent in so many different ways,1335individuals, insurance companies, brokers, and agents. Man,1336people are tired of it. We owe them to do better so we--1337    Mr. Raskin. Mr. Chair.1338    Mr. Van Drew. I'm on my time, please.1339    Mr. Raskin. Are you? OK.1340    Mr. Van Drew. I am.1341    Mr. Raskin. It wasn't working.1342    Mr. Van Drew. For that reason, regardless of what you feel,1343man, I hope--I'm not even going to ask you because I'm not out1344to embarrass anybody--I hope that every Member on the other1345side read the entire GAO report.1346    I didn't know that was all that was in there. It was1347startling. It was scary. It was of concern. Republicans didn't1348write the damn thing. It came from a nonpartisan government1349organization that just does what's right. Sometimes I don't1350like what they do, but they do what they think is right and1351tell the truth.1352    With that, I will yield to Mr. Correa.1353    Mr. Correa. Thank you, Mr. Chair.1354    Mr. Bagdoyan, you talked about fraud, the GAO report. In1355that GAO report, is there anything there that suggests that the1356premium tax credit should be eliminated?1357    Mr. Bagdoyan. No. That is not part of our work. We're not1358looking at policy or viability, sir.1359    Mr. Correa. OK. I'm going to come back to Professor Cooper.1360    You talked about subsidies being important to cover with1361healthcare lower- and middle-class. We're talking about1362working-class families in this country who when these premiums'1363tax credits expire they will essentially be uninsured.1364    That's really the issue here, insurance for working-class1365families, not about fraud, because there's a lot of fraud in a1366lot of areas in this government. To go after healthcare for1367working-class families, that's what we're talking about today.1368    They're going to expire without a doubt. I want to see each1369and every one of us up here, what kind of phone calls we're1370going to get from our constituents when they end up not being1371able to pay for their healthcare in the richest country in the1372world with the most advanced medical technology in the world.1373    Mr. Cooper, let me ask you a question: Senators are talking1374about healthcare savings plans as opposed to tax credits. How1375is this going to enable Americans to afford healthcare?1376    Mr. Cooper. Thank you for the question, Congressman. I1377don't think they do. I don't think they fundamentally address1378three core issues.1379    The first is it still exposes consumers to significant out-1380of-pocket costs. If you look at the plans people are going to1381enroll in, they're going to have out-of-pocket maximums for1382individuals at $10,000, for families around $20,000. We're not1383going--1384    Mr. Correa. Small business owners, entrepreneurs, and their1385employees, how will this tax credit cancellation help them1386afford healthcare?1387    Mr. Cooper. The health savings accounts won't make getting1388insurance easier. We're going to see premiums for a couple1389making $85,000 who are 60 years old jump by $20,000. It's not1390going to help those people.1391    Mr. Correa. Let's talk about this red herring, fraud. There1392is fraud. Are individuals insured getting rich off this fraud?1393Getting a subsidy for their healthcare, are they using it to1394finance their vacations, or are we talking about an industry1395with brokers that are essentially making money?1396    The 850 that were suspended. How many of those individuals1397actually spent time in jail or actually were able to cough up1398those illegally gotten gains? Anybody here tell me? How many of1399those folks spent a day in jail, gave back ill-earned savings,1400earnings that they got fraudulently?1401    We're talking about fraud here today, and nobody, nobody1402went to jail. How serious really are we about fraud versus1403insuring individuals? Dead people and Social Security numbers.1404Did those people benefit from the subsidies, did their1405relatives benefit from the subsidies, or did the brokers make a1406buck off the government? Which one is it? Anybody?1407    Ms. Bai. The insurance company and the brokers. They have1408every incentive.1409    Mr. Correa. Why didn't they go to jail?1410    Dr. Blase. There have actually been some people that have1411gone to jail.1412    Mr. Correa. The punishment here is to punish every American1413that's subsidized today on the Affordable Care Act. They're the1414ones that are going to be punished because they are going to1415lose the ability to afford healthcare. That's what we're saying1416here today.1417    I'm going to tell my colleagues here, let's see what1418happens January 1st next year when you start getting the phone1419calls from your constituents that are uninsured, lose1420insurance, or those hospitals that are relying on those1421premiums to stay open, not in the big cities but out in the1422countryside.1423    That's what this debate is really about. Fraud? Let's get1424the DAs, attorneys general to go after these criminals. To go1425after middle-class hardworking families and take away the1426possibility of having healthcare and saying it's a broken1427system? If it's a broken system, I challenge my colleagues,1428show me something better. We're waiting for your solutions.1429    Thank you, Mr. Chair, and I yield.1430    Mr. Van Drew. Thank you, Mr. Correa.1431    I'd like to submit with unanimous consent an article into1432the record. The press release is titled, ``President of1433Insurance Brokerage Firm and CEO of Marketing Company Convicted1434in $233 Million Affordable Care Act Enrollment Fraud.''1435    The American people are the victim. This is a press release1436from the Department of Justice. I'd like to submit that. With1437that being said--1438    Mr. Correa. Mr. Chair, I'd also like to submit some1439articles for the record:1440    (1) The Kaiser Healthcare News, ``Health Savings Accounts,1441backed by GOP, cover fancy saunas, not insurance premiums'';1442    (2) The Washington Post, ``Why Healthcare Savings Accounts1443aren't the fix Republicans hope for'';1444    (3) By Fortune Magazine, ``Trump wants more healthcare1445savings, yet they can't pay for the insurance premiums'';1446    (4) Kaiser Foundation, ``Fraud in the Marketplace,1447Enrollment and Eligibility: Five Things to Know'';1448    (5) Keep Americans Covered fact sheet on healthcare; and1449then finally1450    (6) Small Business Majority, ``The expiration of the ACA1451enhanced tax credits will devaState the small business1452community.''1453    Mr. Van Drew. Without objection. I now recognize Mr. Issa1454from the great State of California.1455    Mr. Issa. Thank you. Dr. Blase, is it true that if1456government subsidizes part of healthcare that it lowers the1457cost to the individual who pays for healthcare?1458    Dr. Blase. Yes.1459    Mr. Issa. Is it equally true that it has no side effect on1460the actual cost of healthcare?1461    Dr. Blase. Yes. Well, it raises the taxpayer's cost.1462    Mr. Issa. The fact is, if we want to lower the cost of1463healthcare, we have to attack the cost of healthcare, not the1464subsidy that ultimately lowers it for some while raising it for1465others through being taxed.1466    There was a lot of discussion today about there isn't1467fraud. In your experience, if we prosecute as many frauds as we1468can, if we claw back as much dollars as we can, do we make the1469return on investment and the likelihood of additional1470fraudsters going down? In other words, is prosecution and1471clawback a deterrent?1472    Dr. Blase. It is. Mr. Issa, I would say here the real1473problem is the underlying incentives. The underlying1474incentive--1475    Mr. Issa. I'll get to that.1476    Dr. Blase. OK.1477    Mr. Issa. Then, the next one is an affirmative request to1478have a benefit, an unreasonable thing to ask for from everyone1479who receives the benefit, in general?1480    Dr. Blase. I do not think that's an unreasonable request,1481no.1482    Mr. Issa. Requiring that if someone wants to renew, they1483apply for it not only reduces fraud, but it clearly is intended1484to be a reasonable request that somebody say they want it and1485they're entitled to it.1486    Dr. Blase. Especially if the product is nearly fully or1487entirely fully subsidized by the government.1488    Mr. Issa. I agree. I would like to yield the remainder of1489my time to Mr. Onder.1490    Mr. Onder. Thank you, Representative Issa.1491    I wanted to read a portion of a letter in my office. I'll1492abbreviate it in interest of time. This is from a Missouri1493dairy farmer.1494    He says,14951496        We seem to have gotten health insurance confused with actual1497        healthcare. I can say from personal experience that having1498        coverage through the Marketplace does absolutely nothing for me1499        in regard to actually getting healthcare. The plan we've had1500        for the last years has a deductible and copay that is so high I1501        typically go to see doctors as a self-pay patient. This gets me1502        a discount on care, and I will be charged less than half of1503        what it would be to pay the deductible if insurance was billed.15041505He said,15061507        Second, the consolidation of health providers has led to1508        skyrocketing costs. This leads to total lack of price1509        transparency.1510He goes on.1511    Basically, this dairy farmer laid out the Republican plan1512for healthcare, which is to promote competition and1513transparency and thereby deliver lower prices and better1514quality.1515    Dr. Blase, I know you covered this in your testimony, but1516this is important to reiterate. For the record, the expiring1517COVID-era subsidies are responsible for what percentage of the15182026 premium?1519    Dr. Blase. The expiring subsidies are responsible for a1520very small percentage, Congressman. About 3 percent are1521expiring.1522    Mr. Onder. About three percent. The remaining 13.3 percent1523premium increase will still go into effect regardless of1524whether the COVID-era subsidies--1525    Dr. Blase. Yes. Premiums are going up next year because of1526underlying problems with ObamaCare, not because the enhanced1527COVID-era subsidies are expiring.1528    Mr. Onder. What is the actual cause of that 13.3 percent1529increase?1530    Dr. Blase. There is a lot of structural problems with1531Obama-Care. The regulatory structure increases cost over time,1532and the underlying subsidy structure within ObamaCare has1533increased cost.1534    I think Professor Cooper is right. There are underlying1535healthcare costs, but ObamaCare is inherently inflationary,1536both the regulations in ObamaCare and the subsidy structure in1537ObamaCare.1538    If you want to lower healthcare prices and costs within1539ObamaCare, you need to tackle the basic architectural flaws.1540    Mr. Onder. Thank you, Dr. Blase. Here we have this chart,1541if you can put that back up. We see that rates in ObamaCare1542went up twice that of the average employer-based plan and three1543times the rate of inflation.1544    I yield to the Chair of the Full Committee, Representative1545Jordan.1546    Chair Jordan. I thank the gentleman for yielding.1547    I was just going to point out, this is something that1548doesn't happen too often, where the Democrat witness actually1549agrees with the Republican plan, because Professor Cooper said,1550quote, ``Subsidies aren't a solution, aren't the solution, they1551should be temporary.''1552    That's where we're at. We want to address the underlying1553problem. Then, he talked about reform. He talked about site-1554neutral. We want all those things too. That's the point.1555    A Democrat, someone, I think the Ranking Member said1556earlier, ``the Republicans don't have a fix.'' The Democrat fix1557is to continue the same old thing, which is just what that1558chart displayed doesn't work, and continue the subsidies1559forever, not temporary, as their witness said they should be.1560    We want temporary subsidies to deal with the cliff, but we1561need the reforms that encourage choice and competition and1562would actually bring down premium costs.1563    I wish we had more time. I appreciate the witnesses and the1564testimony they gave. I appreciate the study from the GAO, which1565showed just all the fraud that's taking place as well.1566    I yield back to the Chair. Thank you for having this.1567    Mr. Van Drew. Thank you, Chair.1568    Let me just say I agree with the Chair. It's something I've1569been saying all along. Temporarily, you have got to do1570something. Long term, we have to do so much better. That's what1571this was about, this hearing.1572    With that being said, it concludes today's hearing. We1573thank our witnesses for appearing before the Subcommittee1574today. Feel free before I gavel out. Yes, go ahead.1575    Mr. Raskin. This is from the American Hospital Association.1576This is ``Setting the Record Straight: Separating Fact From1577Fiction on Health Insurance Marketplace Fraud''; Professor1578Cooper's article in The New York Times, ``The Health Care1579Debate We Really Need''; and finally, the Georgetown Center on1580Health Insurance Reform, ``Health Savings Accounts: Robin Hood1581in Reverse.''1582    Mr. Van Drew. I thank the Ranking Member. Without1583objection.1584    That concludes today's hearing. Without objection, all1585Members will have five legislative days to submit additional1586written questions for the witnesses or additional materials for1587the record.1588    I again want to apologize to you all. I wanted to keep you1589here until you were exhausted and we had a couple of hours we1590were stuck on the floor. You did a good job. Thank you.1591    Again, I apologize to the other side of the aisle. Again, I1592wish we could have debated even longer.1593    With that, without objection--and I apologize to our guys.1594Without objection, this hearing is adjourned.1595    [Whereupon, at 5:06 p.m., the Subcommittees were1596adjourned.]15971598    All materials submitted for the record by Members of the1599Subcommittee on Oversight and Subcommittee on the Administra-1600tive State, Regulatory Reform, and Antitrust can be found at:1601https://docs.house.gov/Committee/Calendar/ByEvent.aspx?Event1602ID=118732.16031604                          [all]