The Affordable Care Act (ACA) marketplaces, which serve as the lifeline for millions of Americans seeking health coverage, have once again become the center of a heated political debate. This time, the focus is on whether these marketplaces are teeming with “phantom” enrollees—individuals who, according to some analyses, are signed up for coverage but do not actually use any medical care during the year. Republican lawmakers have seized on this narrative as part of a broader argument against extending the enhanced premium tax credits that have helped make ACA coverage affordable for low- and middle-income Americans. These subsidies, set to expire at the end of 2025, have become a flashpoint amid the ongoing government funding stalemate in Washington.
Vice President JD Vance recently stated during a CBS News interview, “The tax credits go to some people deservedly. And we think the tax credits actually go to a lot of waste and fraud within the insurance industry. We want to make sure the tax credits go to the people who need them.” This statement encapsulates the GOP’s position: that the ACA subsidies are rife with inefficiencies, if not outright fraud.
Central to the Republican talking point is a report released in August by the Paragon Health Institute, a think tank aligned with conservative policy circles. Paragon claims to have identified a growing number of “phantom enrollees” in ACA marketplaces—individuals who, according to their data, do not make any claims on their insurance during the year. Paragon president Brian Blase argues that these zero-claim enrollees exceed what one would expect in a typical, functioning health insurance market. According to Blase, this trend points to a system in which insurers and brokers are profiting while consumers, some of whom may not even realize they are enrolled, are left out of the healthcare process.
Paragon’s analysis relies on Centers for Medicare & Medicaid Services (CMS) data, which tracks plan enrollments rather than unique enrollees. This distinction is critical because individuals who switch plans during the year may be counted more than once, inflating the number of zero-claim enrollees. For instance, CMS data shows that in 2021, about 19% of plan enrollments had no associated medical claims. By 2024, that figure had jumped to 35%, a statistic Paragon interprets as evidence of widespread fraud.
Yet health policy experts urge caution in drawing sweeping conclusions from these numbers. Cynthia Cox, vice president and director of the Program on the ACA at KFF Health News, points out that plan-switching, extended open enrollment periods, and partial-year coverage can all artificially inflate the proportion of zero-claim enrollees. “We’re not trying to argue there is no fraud—it exists,” Cox explains. “But the question is, how big is this problem? Just suggesting that anyone who doesn’t use their insurance is committing fraud isn’t accurate. Plenty of people simply don’t need care in a given year.”
Indeed, it is entirely plausible—and statistically expected—for healthy individuals to go a year without filing any claims. The enhanced ACA subsidies implemented under the American Rescue Plan Act of 2021, and extended by the Inflation Reduction Act of 2022, made coverage more accessible and attractive to younger, healthier populations, who are naturally less likely to use their insurance. Research shows that even in employer-sponsored plans, an average of 23% of enrollees made no claims from 2018 to 2022.
Some analysts see the GOP narrative as more about political messaging than a reflection of systemic fraud. Paragon, founded by Blase in 2021, has become highly influential in Republican health policy circles. Alumni from the organization have held positions in the Trump administration and in the office of House Speaker Mike Johnson, which helps explain why the idea of “phantom enrollees” has become a centerpiece in Republican arguments during the federal government shutdown.
Democrats, by contrast, focus on the very real consequences of letting the enhanced subsidies expire. They warn that without Congressional action, premiums will spike, leaving millions of Americans struggling to afford coverage. Speaker Johnson and other Republican leaders counter that the subsidies primarily benefit insurance companies and drive up healthcare costs, framing the debate as a matter of fiscal responsibility and program integrity.
Experts caution that the reality is far more nuanced than either political party suggests. “Somehow the idea that people not using health insurance is a problem—well, it might appear so superficially, but in principle it isn’t,” says Joseph Antos, senior fellow emeritus at the American Enterprise Institute. “Insurance works because some people pay in and don’t make claims. That’s the foundation of risk pooling.”
Trade associations such as the American Hospital Association (AHA) and the American Health Insurance Plans (AHIP) have also challenged Paragon’s claims, emphasizing that ACA plans have strict profit caps and that the enhanced subsidies have reduced out-of-pocket costs for millions of Americans without enriching insurers unduly.
In short, the “phantom enrollees” debate illustrates the complex intersection of policy, politics, and perception. While there is some evidence of enrollment irregularities, much of the data reflects routine behavior in insurance markets rather than massive fraud. At the same time, the discussion underscores the high stakes of the ACA subsidy debate, which directly affects the cost and accessibility of healthcare for tens of millions of Americans.
As Congress continues to grapple with the future of these subsidies amid the federal government shutdown, both sides of the aisle will continue to interpret the numbers in ways that support their broader political goals. For everyday Americans, the takeaway is clear: understanding the nuances of the ACA marketplace is more important than ever, as the consequences of legislative inaction—or overreach—could dramatically alter healthcare access and affordability in 2026.