Cory Lloyd thought signing up homeless people for health insurance they never asked for was, in his own words, "a killer idea." Lloyd and his partner Stephen Strong ran a fraud ring that used 40 brokerage agents to funnel 50,000 people into Obamacare plans — collecting commission payments from insurance companies while their "enrollees" never saw a doctor or filled a prescription. Both men were convicted on conspiracy to commit wire fraud, wire fraud, and conspiracy to defraud the United States. Strong picked up two additional money laundering counts. Combined: 20 years in prison and $180.6 million in restitution.
They weren't the only ones running the play. They were just the ones who got caught first.
Vice President JD Vance announced Monday that the White House Fraud Task Force is removing approximately 760,000 fraudulent enrollees from the Obamacare exchanges, saving taxpayers an estimated $2.2 billion. The purge is the latest product of the administration's government waste crackdown, executed in coordination with CMS Administrator Dr. Mehmet Oz and the Centers for Medicare and Medicaid Services.
The numbers Oz laid out on the fraud ring's mechanics are worth sitting with. Normally, about 1% of Obamacare exchange enrollees lack a Social Security number. Among the flagged population: 1.1 million people enrolled with no Social Security numbers at all. Oz noted that 35% of the enrollees in question never used the program — never bought a prescription, never saw a doctor. "That's just not possible," Oz said. Some of the people on the rolls, according to the task force, "quite literally didn't even exist."
Vance put the dollar figure in human terms. "To put into context the amount of money that we're stopping from going to fraudsters today, $2.2 billion — the average American child receives about $4,000 in health care benefits every single year," he said. That's the equivalent of healthcare for 550,000 American kids redirected away from people who were either fictional, dead, or had no idea they'd been enrolled.
The fraud wasn't sophisticated. Lloyd's own text messages, read aloud by Oz during the announcement, spelled out the scheme: "It's a killer idea to sign up these poor individuals, make them victims." The ring targeted hurricane victims in Florida and homeless and jobless individuals — people unlikely to check whether someone had enrolled them in a federal health plan and started collecting commissions on their names. Oz described Lloyd as having "a very punchable face." The jury apparently agreed with the sentiment.
Beyond the 760,000 removals, CMS has flagged an additional 419,000 current enrollees for income and residency verification — a review being handled by CMS Deputy Administrator Kimberly Brandt. Vance made the verification standard clear: "We're going to make sure that they are, first of all, legal residents of the United States of America."
The criticism from the usual institutional defenders of the ACA is that legitimate enrollees might get swept up. But when more than a million people on the rolls don't have Social Security numbers and a third of flagged enrollees have never once used their coverage, the question isn't whether the net is too wide. It's how the net wasn't cast years ago.
The Biden-era enrollment surge was celebrated as proof the Affordable Care Act was working. Enrollment numbers climbed. Press releases were written. Nobody in charge seemed curious about why over a million enrollees couldn't produce a Social Security number, or why hundreds of thousands of "insured" Americans never visited a doctor.
Twenty years and $180.6 million in restitution for two men in one ring. 760,000 names pulled. $2.2 billion back in the treasury. The task force, which also involves FTC Chairman Andrew N. Ferguson and the Department of Justice, is still reviewing.
The enrollment numbers looked great on paper. They just weren't people.
