Sept 22 (Reuters) - The US Centers for Medicare & Medicaid Services said on Tuesday it canceled 315,000 Obamacare health plans covering about 760,000 people last month, citing unverified citizenship or immigration documentation and suspected improper enrollments.
The move, disclosed in rule-making documents published in the US Federal Register, comes as the agency says it will bar some 569 brokers who it says "submitted statistically implausible rates of plan year 2026 applications" that did not include
applicant information, such as a social security number.
The plans, created by Democratic President Barack Obama's signature Affordable Care Act, offer subsidies based on income. Republican President Donald Trump sought unsuccessfully in his first term to overturn the law and has proposed changes that would make the plans less comprehensive.
Millions of people dropped coverage this year as rising medical costs and the expiration of extra COVID-era subsidies made monthly premiums unaffordable.
The administration is using an emergency-style rule-making process to impose an immediate, industry-wide freeze on new Obamacare broker registrations, bypassing the usual advance notice-and-comment period.
CMS said some brokers and agents have allegedly enrolled people without genuine consent, changed people's plans without permission, used inaccurate information, or created questionable applications to receive commissions.
Such activity can trigger improper federal premium-tax-credit payments and can leave consumers with surprise coverage changes, medical-bill problems, or tax issues, CMS said.
The health agency said brokers who do not have a registration for 2026 will face the effects of the freeze until February 1, 2027.
"A blanket moratorium on new agent and broker registrations would punish legitimate professionals instead of targeting the bad actors responsible for fraud," said Mychal Walker, president of the National Association of Benefits and Insurance Professionals, a trade group representing health-insurance agents and brokers.
The association urged CMS to reconsider any moratorium and instead focus on targeted safeguards and enforcement that stop fraudulent activity while protecting consumers’ access to legitimate, licensed agents and brokers.
CMS said unauthorized enrollments through Obamacare plans could result in up to $6.6 billion in improper federal spending for the 2026 plan year.
According to the Wall Street Journal, the policy cancellations were led by Vice President JD Vance's antifraud task force with administration officials estimating the action could save about $2.2 billion in taxpayer funds.
A report by the US Department of Health and Human Services released earlier this year estimated that nearly half of new Obamacare enrollments between 2021 and 2024 may have been improper, phantom or fraudulent. CMS said more than 1 million enrollees received coverage without providing a social security number.
(Reporting by Christy Santhosh in Bengaluru, Editing by Alexandra Hudson and Bill Berkrot)
