Obamacare exchange flaw exposed Americans to unexpected health plan switches, watchdog finds

A new government watchdog report warns that stronger safeguards against fraud are needed in the Obamacare exchanges to prevent bad actors who serve as agents and brokers in the federal marketplace from making unauthorized plan enrollments and changes to get compensation from health insurance providers.

The Government Accountability Office (GAO) on Monday released a report showing that the number of consumer complaints about unauthorized plan enrollments and changes grew more than fourfold from 2023 to 2025, rising from a combined 66,548 to 299,604 in that period. 

The review found that the Centers for Medicare and Medicaid Services (CMS), which maintains the federal Obamacare exchange, had insufficient controls to protect consumers from unauthorized activity by unscrupulous agents and brokers. 

Among the issues it identified were weak processes to ensure consumer consent for agent or broker actions, a lack of restrictions ensuring that only the agent or broker associated with a consumer's enrollment can access the consumer's exchange records, and CMS not informing consumers of all actions taken by agents and brokers.

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The GAO found the federal Obamacare exchange run by the Centers for Medicare and Medicaid Services lacked consumer safeguards. (Kayla Bartkowski/Getty Images)

GAO recommended stronger security controls, including one-time passcodes to verify consumer authorization, restricting access to the broker of record, and notifying consumers when brokers take actions on their accounts.

Some agents and brokers switched consumers into different Obamacare plans without their knowledge or consent, according to the GAO. The unauthorized changes can force Americans to change doctors, lose coverage for medications and pay higher out-of-pocket costs, the report found. 

The report also warns that consumers could be hit with unexpected tax liabilities if inaccurate income or eligibility information was used to obtain federal premium tax credits, while taxpayers could end up footing the bill for subsidies paid to ineligible enrollees. 

Many consumers do not discover the unauthorized changes until they seek medical care or receive an IRS notice during tax season, according to the GAO.

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President Trump has made rooting out fraud, waste and abuse a cornerstone of his agenda. (Anna Moneymaker)

Separately, the Trump administration has made healthcare fraud enforcement a major priority.

A 2024 CMS enrollment data review identified 2.8 million Americans potentially enrolled in multiple Medicaid, CHIP or subsidized Affordable Care Act exchange plans.

The administration has also targeted Medicaid fraud, putting all 50 states on notice to identify improper enrollment activity and develop fraud-prevention plans.

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CMS Administrator Dr. Mehmet Oz told Gxstocks in a statement that, "Consumers deserve confidence that their health coverage decisions are made by them, not by bad actors seeking to exploit the system."

"CMS has made protecting Marketplace consumers a top priority, and we will continue strengthening our oversight, enforcement, and technology to prevent fraud, safeguard taxpayer dollars, and ensure consumers remain in control of their health coverage," Oz added.

Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz. (Alex Wong/Getty Images)

House Ways and Means Committee Chair Jason Smith, R-Mo., told Gxstocks that the report showed "this failed system has hugely inadequate structural safeguards, enabling widespread unauthorized enrollments and plan changes."

"Specifically, GAO found that enrollment essentially operates on an honor system, where no one at CMS is verifying that consumers are requesting health care and consumers are never notified when they are enrolled. This hurts working families, many of whom did not want and did not request the coverage they were enrolled in," Smith added. "Republicans are continuing to fight to close loopholes, expand access to quality health care, lower costs for working families, and protect taxpayer dollars."

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Fox News Digital's Peter D'Abrosca contributed to this report.