Trump administration cancels Obamacare cover for 760,000 over fraud claims

The Trump administration has cancelled Obamacare coverage for about 760,000 people, citing fraudulent or improper enrolments. The move is part of a wider federal healthcare fraud drive that has also frozen broker registrations and triggered industry concern.

In Short

• CMS said many cases involved unverifiable citizenship or immigration documents
• Officials alleged some consumers were enrolled without knowledge or proper consent
• Another 419,000 to 450,000 cases are under eligibility and income review

The Trump administration has cancelled Obamacare health coverage for about 760,000 people, alleging that the enrolments were fraudulent, improper or involved people who did not meet eligibility requirements. Vice President JD Vance said the move was part of a broader crackdown on healthcare fraud that could save taxpayers an estimated USD 2.2 billion.

The Centers for Medicare and Medicaid Services (CMS) said it cancelled around 315,000 Affordable Care Act plans last month. The agency cited unverified citizenship or immigration documentation and suspected improper enrolments. Officials said some people had allegedly been enrolled without their knowledge, while others either did not exist or could not be reached despite repeated attempts to contact them.

Vance described those affected as including what he called "phantom people" as well as real people who did not qualify for Obamacare subsidies. He said some individuals had allegedly been signed up by brokers without their knowledge.

The administration is also reviewing another 419,000 to 450,000 enrollees to determine whether they are legally eligible to receive coverage and meet income requirements. CMS Administrator Mehmet Oz said the administration expects the savings from the crackdown to increase further.

BROKER REGISTRATION FREEZE

CMS is taking action against insurance brokers accused of facilitating questionable enrolments. The agency said it will bar 569 brokers after identifying what it described as "statistically implausible" numbers of 2026 applications that lacked key information, including Social Security numbers.

The administration has also imposed an immediate freeze on new Obamacare broker registrations under an emergency-style rulemaking process. Oz described the measure as a temporary nationwide moratorium lasting six months.

CMS alleged that some brokers enrolled people without genuine consent, changed existing plans without permission, submitted inaccurate information or created questionable applications to obtain commissions.

Brokers without 2026 registration will remain frozen out until February 1, 2027, according to the administration.

The broker freeze could affect insurers that depend heavily on agents to enroll customers. Industry representatives have argued that a blanket suspension could also affect legitimate brokers and consumers, while calling for more targeted action against suspected fraud.

COST OF SUSPECTED FRAUD

CMS estimates that unauthorised Obamacare enrolments could result in up to $6.6 billion in improper federal spending during the 2026 plan year. The administration says the latest cancellations are expected to prevent around USD 2.2 billion in taxpayer-funded payments.

The exact status of the USD 2.2 billion figure was not immediately clear. Vance described it as money being saved by stopping payments to suspected fraudsters, while Oz said officials had recovered the money.

The Affordable Care Act, signed into law by then-President Barack Obama, provides subsidised health insurance based on income. The programme has faced growing affordability pressures in 2026 following rising medical costs and the expiration of enhanced subsidies introduced during the Covid-19 pandemic.

The administration's latest action comes amid a broader effort led by Vance to target alleged fraud across federal healthcare programmes. The task force includes Health Secretary Robert F. Kennedy Jr, Oz and Federal Trade Commission Chairman Andrew Ferguson.

An HHS report released earlier this year estimated that a significant share of Obamacare enrolments between 2021 and 2024 may have been improper, phantom or fraudulent. CMS has also said more than 1 million enrollees received coverage without providing a Social Security number.

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