The facts about the individual marketplace

Author: David Merritt

Here are a few important facts about the individual marketplace for health insurance:

• 24 million Americans get their coverage through the individual marketplace.
• Congress is considering significant changes this year that could leave more than 8 million of them uninsured.
• Critics claim that 6.4 million enrollees are fraudulent. They’re wrong.

The latest report from Paragon Institute suggests that millions of Americans deliberately report inaccurate incomes to qualify for premium tax credits that make coverage and care more affordable. They base this conclusion on a comparison of overall marketplace plan selections against self-reported income from survey data collected by the Census Bureau. Paragon’s reliance on self-reported income introduces significant uncertainty, since such surveys often struggle to measure very low income, leading to inflated estimates of fraudulent enrollment.¹

Unintentionally misstating income isn’t fraud. Many Americans in the individual marketplace are seasonal workers, rely on tips, or work multiple jobs throughout the year. They’re often paid by the hour, and their hours can fluctuate as they care for a child or family member. These factors would make estimating annual income difficult for anyone, let alone those who are straddling the line between poverty and living paycheck to paycheck. This is why policy proposals to modify premium tax credit recoupment and re-enrollment should protect hardworking, low-income Americans from severe financial burdens.

Looking at actual tax data—rather than survey data—the overall accuracy of premium tax credit payments is extremely high. In a 2023 report, the Treasury Inspector General found that payments were generally within a few percentage points of what taxpayers are eligible for. Even with the statutory limits on repayment, overpayments of premium tax credits that were not recouped represented only 2.5% of total premium tax credits paid out². In addition, HHS estimated that the improper payment rate for premium tax credit payments was only 1.01% ($562.93 million) for the federal marketplaces³. This is hardly indicative of a market “…riddled with fraud stemming from improper enrollment.”⁴

We know that the individual marketplace needs to work for the millions of Americans who depend on it, as well as for the hardworking taxpayers who support it. We are committed to a program that is effective—and accountable.

The good news is, the Trump Administration took strong steps this spring to combat fraud. They proposed a more rigorous enrollment process, limiting the open-ended availability for enrollment, and holding insurance brokers accountable for gaming the system. These are strong steps Blue Cross Blue Shield Association (BCBSA) supported long before the rules were even proposed—and urge the Administration to finalize now.

Congress should also act. If Congress fails to extend the expiring premium tax credits at the end of this year, 5 million Americans will lose health insurance and premiums will skyrocket for Americans that remain in the market.

A strong program keeps premiums affordable for the 24 million Americans who rely on the marketplace for their coverage, while at the same time ensuring accountability on behalf of the taxpayers who fund it.

Those are numbers that add up.

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1. Linking Survey and Administrative Data to Measure Income, Inequality, and Mobility, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8142965/
2. American Rescue Plan Act: Continued Review of Premium Tax Credit Provisions, Figure 2, Treasury Inspector General for Tax Administration, June 14, 2023. https://www.tigta.gov/sites/default/files/reports/2023-06/202347036fr.pdf
3. Fiscal Year 2024 Improper Payments Fact Sheet, Nov. 15, 2024,
4. The Greater Obamacare Enrollment Fraud, Paragon Institute, June 2025, https://paragoninstitute.org/private-health/the-greater-obamacare-enrollment-fraud/