Overpayments in Medicare Advantage drive up Part B premiums

For more than a decade now, our federal government has overpaid Medicare Advantage insurers tens of billions of dollars more than it spends on people in Traditional Medicare. Those additional dollars largely end up as extra profits. Because of these overpayments, people with Medicare paid about $216 more a year in Part B premiums in 2025, reports Tony Pugh for AARP.

Because AARP promotes United Healthcare’s Medicare Advantage plans to its members, AARP benefits handsomely—most recently, to the tune of $9 billion dollars—from these overpayments. It is unusual for an AARP reporter to explain the financial toll overpayments to Medicare Advantage insurers take on AARP’s members. The overpayments not only raise premiums, they reduce the Social Security benefits for many Americans, according to an analysis by a Republican-led Congressional Committee, the Joint Economic Committee.

The Joint Economic Committee, with members from both the House and the Senate, proposes a simple and appropriate fix: Pay insurers in Medicare Advantage at the same level for each enrollee as traditional Medicare. The Committee finds that “Reform that gradually achieves payment parity could save each senior approximately $2,600 a year.”

A new MedPAC report finds that overpayments in Medicare Advantage will total roughly $76 billion this year. Put differently, our government is paying insurers 14 percent more for their enrollees than it is paying for enrollees in traditional Medicare. Our government should not be wasting Medicare dollars.

Overpayments stem from Medicare Advantage insurers enrolling more people in good health than Traditional Medicare, and insurers claiming their enrollees are sicker than they are in order to generate higher payments.

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