Zero-Claim Enrollment in the Affordable Care Act Individual Market

Why It Matters

Improper enrollments waste billions in subsidies and undermine ACA’s goal of expanding affordable coverage, prompting urgent regulatory scrutiny.

Key Takeaways

• Post‑COVID ACA enrollment surged, raising zero‑claim rates significantly.
• Improper broker enrollments likely caused 3‑4 million excess policies.
• Selection and Medicaid unwinding explain only part of the gap.
• Zero‑claim subsidies cost roughly $8 billion in 2024 federal spending.
• Free‑premium plans enable brokers to enroll unaware consumers.

Summary

The seminar focused on a puzzling rise in zero‑claim rates among individuals enrolled through the Affordable Care Act exchanges after 2021. Researchers from CMS, ASPE and academia examined why millions of people were paying premiums for plans that never generated a claim, costing taxpayers billions.

Using exchange data from 2017‑2024, they identified a 13.4‑percentage‑point gap in zero‑claim rates between exchange enrollees and comparable small‑group markets. After ruling out Medicaid unwinding and general health improvements as major drivers, they attributed roughly half of the gap—about 6.2 to 13.3 points—to improper enrollments, equating to 3‑3.8 million people who likely never knew they were covered.

A key illustration was the role of brokers: enhanced direct enrollment lets brokers place consumers on zero‑premium plans without the consumer’s explicit awareness, and brokers earn commissions per enrollment regardless of usage. This mechanism, combined with the surge of free‑premium options under ARPA and the IRA, created a low‑cost avenue for accidental or intentional enrollments.

The findings suggest significant policy implications. If a sizable share of subsidies funds unused coverage, oversight of broker practices and enrollment verification may be needed to protect federal resources and ensure that ACA subsidies reach intended beneficiaries.

Original Description

Zero-Claim Enrollment in the Affordable Care Act Individual Market: Health, Medicaid Transitions, or Improper Enrollment?

A special Duke-Margolis Seminar featuring Anup Malani, Lee and Brena Freeman Professor at the University of Chicago Law School, currently on leave to serve as the Chief Economist, Centers for Medicare & Medicaid Services.

Enrollment in Affordable Care Act individual market plans with zero claims raises important questions about enrollee health status, coverage transitions to Medicaid, and the potential for improper enrollment. Using administrative and enrollment data, Anup discusses the drivers of zero‑claim enrollment to distinguish between healthy non‑utilizers, individuals experiencing mid‑year coverage shifts, and cases that may reflect administrative or policy misalignment.