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Government still overpays commercial Medicare plans

Written by Diane Archer

At a recent meeting of the Medicare Payment Advisory Committee (MedPAC), commissioners learned that, all things being equal, Medicare Advantage plans–commercial health plans offering Medicare benefits–cost the federal government five percent more than traditional Medicare in 2016. But, according to Kip Sullivan at the Health Care Blog, no one could explain why these commercial Medicare plans offer such poor value. And, no commissioner asked why government still overpays these commercial Medicare plans.

It’s worth noting that Congress passed legislation in 2003 supporting the choice of commercial Medicare Advantage plans through Medicare on the theory that these commercial health plans would be more cost effective than traditional Medicare. More than a dozen years later, traditional Medicare remains more cost-effective. Yet, Congress is neither suggesting that the government ratchet back payments to these plans, nor that they be terminated.

As startling, the MedPAC commissioners charged with overseeing Medicare payments cannot get an explanation as to why Medicare Advantage plans are not reducing Medicare spending. The MedPAC staff believes that it is not possible to get the answer to this question. But, no one in Congress or on the MedPAC committee is even suggesting that Medicare Advantage plans be transparent and provide data explaining why they cost more than traditional Medicare.

Taxpayers pay for Medicare Advantage plans, which are administered through commercial insurance companies such as UnitedHealthcare, Aetna and Humana, Yet, for some inexplicable reason, these insurers are permitted to claim that most of  their data is proprietary and are not held accountable for their higher costs.

Now, Speaker Ryan and his Republican allies in Congress are on a path to privatize all of Medicare, which will not only significantly drive up out-of-pocket costs for people with Medicare but will leave us even more in the dark about what’s working and not working in our health care system. Talk about giving away the store at the expense of people with Medicare and U.S. taxpayers.

If you oppose Ryan’s plan to privatize Medicare, please sign this petition and visit your Senators to make your views known.

Here’s more from Just Care:



  • Great! Commercial Medicare plans (Medicare Advantage) cost the government more and then deny payment for care whenever possible! No wonder their CEOs make millions.
    We should be passing laws to get commercial insurance companies out of Medicare rather than privatizing Medicare. Pay attention voters—is this the change you voted for?

  • I tried a Medicare Advantage plan for one year. It ended up costing me more because so many of the services I needed were not covered or they didn’t have a doctor or medical treatment center signed up for the service. It was nice getting my prescriptions for free but my savings didn’t cover the cost of my other treatments. So…not only did the government pay more, I did too.

    • Yes, unfortunately, that is what happens with Medicare Advantage—the commercial, for-profit insurance company makes money ripping off the elderly and disabled. Ask your representatives in Congress to rescind Medicare, Part C (Medicare Advantage)!

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