Overpayments in Medicare Advantage (MA) are likely driving up Part B premiums for seniors, according to a new study from Congress' Joint Economic Committee (JEC).
The report found the average MA enrollee costs the federal government 120% of what it would cost to cover that same individual in traditional Medicare. When the program was conceived, it was built on the idea that a Medicare program run by private plans would cost less than the traditional program, the report notes.
The committee estimated that the feds overpaid MA plans between $76 billion and $84 billion last year, with individual beneficiaries costing 17% to 20% more to cover than in traditional Medicare.
The JEC report argues that these overpayments ultimately inflate premiums elsewhere, as spending overall is increased. The analysts estimate that, since 2016, MA overpayments have increased Part B premiums by $82 billion, with traditional Medicare enrollees bearing about $6 billion of that burden.
Most of that burden (85%) is felt by the enrollee themselves, with the remainder falling on states and taxpayers, according to the report. For many seniors, Part B premiums are withheld from their Social Security checks, meaning rising premiums reduce their take-home pay.
“Let’s be honest about the math, when Medicare Advantage is overpaid, that money doesn’t just disappear, it shows up in the Medicare Part B premiums seniors pay every month, including those paid by traditional Medicare beneficiaries who are not getting extra benefits," said JEC Chairman David Schweikert in a press release.
The report also projects that these impacts will compound over time.
Overall, premiums per-person in Part B are set to double by 2035, growing from $2,440 to about $5,000. Of that total increase, $450 would be attributed to the overpayments in MA.
The committee recommends that payments in MA align more closely to traditional Medicare, which would improve affordability and address the premium growth.
“If Congress is serious about affordability, fiscal responsibility, and fairness, we must take a hard look at Medicare Advantage and make sure the rules are the same for everyone," Schweikert said. "Today, between aggressive upcoding, questionable quality bonuses, and structural overpayments in Medicare Advantage, seniors who stay in traditional Medicare are effectively subsidizing the system."
"That’s not sustainable, it’s not fair, and it can be reformed," he said.