The Trump administration’s crackdown on Affordable Care Act enrollment fraud is threatening profits at major health insurers by culling lower-cost enrollees from the marketplace, leaving a sicker and more expensive patient pool behind.
According to Reuters, Vice President JD Vance announced last week that 760,000 ACA enrollees had been dropped after the government concluded they either did not exist or had been enrolled by brokers without their knowledge. Another 400,000 are under review. The administration has additionally barred hundreds of brokers and closed the marketplace to new entrants, contending that brokers — compensated with a per-enrollee monthly payment — were a primary driver of the fraudulent enrollments.
Policy experts said the removals risk sweeping out legitimate members who simply were not using their coverage because they were healthy. With fewer healthy, low-utilization members in the risk pool, insurers could face a disproportionately ill and costly patient base that squeezes margins through the rest of 2026 and the following year, investors and analysts warned.
Shares of Centene, Molina, Elevance, and UnitedHealth have all declined since the announcement. In the seven days after the news broke, Centene shed 1.5%, Molina tumbled 6.5%, Elevance retreated 4.2%, and UnitedHealth gave up 2.6%.
The timing compounds the financial pressure. Premium rates for 2027 have already been approved, meaning insurers cannot reprice to account for the enrollment shift. “The premium rates for 2027 have already been filed, and at this point, they’ve all been approved and locked down,” Matt McGough, a KFF policy expert specializing in health policy research, told Reuters. Insurers will likely respond by pushing rates higher for 2028, according to Reuters, citing three investors and two policy experts.
CMS said the cancellations followed a standard verification process targeting enrollees signed up by a broker who lacked key identification information, such as a Social Security number. Enrollees removed through the process have a path back to coverage if they successfully confirm their identity, the spokesperson added.
The crackdown also threatens the broker channel that drives most ACA sign-ups. Brokers bring in 75% of marketplace enrollees, according to government data. According to Mike Smith, president emeritus at The Brokerage Inc. in Flower Mound, Texas, the fraud announcement combined with new restrictions on brokers would push consumers away from using brokers altogether. “People will think negatively of the ‘fraudulent insurance brokers’ and paint all of the good brokers with a wide brush,” Smith said.
Source: finance.yahoo.com
