Republicans look to end Medicare Advantage overpayments

More members of Congress on both sides of the aisle are looking at ways to end massive overpayments to Medicare Advantage insurers as a means of reducing federal spending, reports Peter Sullivan for Axios. Ending these overpayments should not affect people’s Medicare benefits, it would simply put spending in Medicare Advantage for each enrollee on a par with spending in Traditional Medicare. In sharp contrast, cutting Medicaid benefits would likely cause tens of millions of Americans to become uninsured or underinsured.

According to a recent MedPAC report, taxpayers could save $84 billion in 2025 alone if the government stopped overpaying Medicare Advantage plans. To be clear, ending overpayments is akin to the government refunding taxes to Americans. Tax refunds are not tax cuts, much as reducing excess payments to Medicare Advantage insurers still keep appropriate payments flowing to Medicare Advantage insurers.

Sen. Bill Cassidy, Sen. Jeff Merkley, Sen. Elizabeth Warren and Rep. Greg Murphy have spoken out about the insurers overbilling and the government overpaying insurers, as has Senator Chuck Grassley.

Murphy wrote on X that these overpayments amount to “insurance companies bankrupting the American citizen for profit.”

CMS-nominated Administrator Mehmet Oz has also criticized insurer overpayments. He too recognizes that insurers are claiming their enrollees are sicker than they are to collect higher payments than they should be receiving. Oz even agreed with Senator Warren at his confirmation hearing that it is “more rational” to reduce government spending by ending these overpayments than by cutting Medicaid benefits, which many Republicans are planning to do.

Will Congress end Medicare Advantage overpayments? It should. In fact, it must if it is going to strengthen Medicare and the Medicare Trust Fund. But, of course, that would eat into the profits of the health insurers. So, the insurers will claim it’s a cut will do everything in their power to mislead the 34 million people in Medicare Advantage plans.

Notwithstanding, the Republicans could address the overpayments. They don’t like the government subsidies to the insurers. In the words of Brian Blase, president of Paragon, who worked in the first Trump administration: “They’re over-subsidized.”

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