In exchange for gift cards, millions of Americans were unwittingly signed up for Obamacare by brokers who scalped their vital information and enrolled them in plans where premiums were paid by the American people, a research group says.  

"The government was sending massive checks to insurance companies who were making windfall profits on behalf of people who didn't use any health care," Brian Blase, president of Paragon Health Institute, a healthcare policy group told Just The News.

A 2021-2022 expansion of Affordable Care Act subsidies, passed through budget reconciliation, made coverage fully subsidized for individuals claiming incomes in a specific range. Paragon Health Institute investigated and estimated that by 2025, at least 6.4 million more people were enrolled in these zero-premium plans than were actually eligible.

Zero premium means the enrollee did not pay for the plan — it was paid via subsidies funded by taxpayers. 

In 2024 40% of people in fully subsidized plans used no healthcare services at all

According to Blase, unscrupulous brokers and enrollment agents exploited the system by advertising cash gift cards and free coverage, collecting personal information from callers, and enrolling them — often without their knowledge or consent, including fictitious individuals.

Many of the enrollees never realized they had coverage because the government paid the full premium directly to insurers, which in turn paid substantial commissions to the enrolling entities. In 2024, 40% of people in fully subsidized plans used no healthcare services at all—2.5 times higher than typical rates—resulting in significant government payments to insurers for largely unused coverage.

Making matters worse, the insurance companies aren't even providing value, says Blase. "85% of all the [insurance company] revenue now comes from the taxpayer, so they don't have incentives to offer products that are low-priced, that appeal to patients." 

"Their primary client now is the United States Treasury, and they're so dependent on the federal government for their revenue source, that's why insurance companies are spending hundreds of millions of dollars lobbying Congress to continue this gravy train of these enhanced Obamacare subsidies."

Who pays for Minnesota fraud? 

As the rest of the country learns of what appears to be historic levels of fraud and waste in the state of Minnesota, the policy group says that it's not just Minnesotans who are footing the bill: it's the rest of the country too. And it all ties back to federal-state entitlement partnerships that weigh lightly on the state and heavily on the nation. 

"When states spend $1 of their own money, they're able to get $9 from the federal government. So, all of this waste in Minnesota, the vast majority is paid by taxpayers outside the state of Minnesota, and the fraud is not dissimilar," according to Blase. 

Blase, who has been addressing fraud in entitlement programs for nearly a decade in numerous capacities, is sounding the alarm on the lopsided responsibility and the outsized fraud that has become an unsustainable burden on the American people, particularly in Medicaid. 

"The federal government is bankrolling the fraud"

One remedy for Medicaid, as well as other programs, is to shut off the federal spigot. According to Blase, "It's the essential step. The federal government is bankrolling the fraud, waste and abuse in the states, and as long as states can draw on an open checkbook from Washington, they don't have incentives to make sure that dollars are appropriately spent."

Referencing the daycare fraud unfolding in Minnesota, Blase criticized the federal government's lack of oversight. "We shouldn't have to rely on amateur investigators going into daycare finding out that there's no children there. The government has access to this data, they know where there are areas that have seen explosive spending." 

Blase also sounded the alarm on states like New York and California. In New York, there has been an unprecedented spike in Medicaid-funded home health aides, who are often family members taking care of relatives, which, Blase says, also creates fertile ground for fraud. In California, fraud has found a home within the hospice care industry. 

Amanda Head is the White House Correspondent at Just The News. Follow her on X.