Congress Could Stop Medicare Advantage Ripoff

Whenever I see the term “hard”-working Americans, I want to barf. In this case, the author appears to be talking about cuts to people using Medicaid. I do not believe anyone in their right mind would use Medicaid if they could pay for an overpriced ACA healthcare policy. Commercial Healthcare Insurance costs for the average citizen is expensive. Many get high deductible plans which would force them to take out loans to pay off at a profitable interest rate. It is a win-win for healthcare policy companies and people making the loans. However, ACA participants are not under a constant threat by politicians about their healthcare plan costing the public.

All of this screams for single payer healthcare. And the politics involved to get to this type of healthcare is abounding with political influence coming from healthcare providers, healthcare insurance companies, and politicians who we elected and who bend to those with greater power than the constituency. We never quite get what we want when the representation keeps changing every 2 or six years.

The next 910 words discusses Medicaid Advantage (and not Medicaid) which is in competition with traditional Medicare. It is more expensive overall than Medicare; but, it has all the bells and whistles which entices people to join when they turn 65. And then as you age it becomes more costly to where people start to return to Medicare. However, they do not get all the benefits of Medicare.

The cutting of Medicare Advantage plans would create greater savings than Medicaid.

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Physicians for a National Health Program (PNHP) puts the cost at up to $140 billion annually (MA Plans). The  Committee for a Responsible Federal Budget (CRFB) posted research suggesting that MA plans might be overpaid by between $180 billion and $1.6 trillion over the next decade. MA favors the medical industry over patients.

“Instead of Medicaid Cuts, Congress Could Stop Medicare Advantage Ripoff,” CEPR, Brandon Novick

American taxpayers are being ripped off. Billions of dollars are wasted in government programs. However, a scam behind much of this plunder – Medicare Advantage overpayments to insurance companies – is not currently on the legislative radar, even though addressing it could prevent cuts to Medicaid.

The Republican majority in the House of Representatives passed a budget resolution directing Congress to find $2 trillion in spending to cut over ten years, or roughly $200 billion per year. Significant media attention has focused on the fact that this would mathematically have to come from slashing Medicaid. However, this is not necessarily true if the Trump Administration and the Department of Government Efficiency (DOGE) want to truly curtail waste, fraud, and abuse.

The House resolution directs the Energy & Commerce Committee to find $880 billions in cuts to the programs under its jurisdiction. This translates to about $88 billion per year. To reach this figure, the committee would have to cut funding from either Medicaid or Medicare, as other smaller programs under its jurisdiction are not sufficient to meet the target set by the resolution.

Republicans have expressed a significant interest in cutting back on Medicaid compared to Medicare, putting forth proposals such as instituting work requirements for people to get coverage – even though most beneficiaries currently do work – or changing the funding mechanism to block grants. As Medicaid is administered by the states, the federal government presently subsidizes state Medicaid spending by matching expenditures at different rates, with states with lower per capita income receiving a higher match but no less than 50% – meaning that the federal government covers at least half the cost.

Cuts to the Medicaid program will undoubtedly reduce the number of people who can get coverage. A Center for Budget and Policy Priorities analysis found that recent Republican proposals to cut Medicaid could force up to 36 million people to lose their health coverage. This figure is almost certainly higher than the number of people who would lose their coverage if all $88 billion were cut from Medicaid, as it represents around 15% of federal spending on the program. But it demonstrates the severe consequences of cuts.

On the other hand, Republicans have not put forth serious proposals to cut Medicare likely due to its universal nature and higher popularity (although both Medicaid and Medicare are popular). All Americans who reach the age of 65 will eventually qualify for coverage, while Medicaid is primarily for the poor.

Yet, there is a way for Congress to meet the $88 billion yearly mark for cuts without actually hurting spending on health care: eliminate Medicare Advantage (MA) overpayments to insurance companies. Traditional Medicare is government-run insurance that provides fee-for-service (FFS) coverage, meaning Medicare pays providers for services provided.

Medicare Advantage is taxpayer-funded private insurance, where dollars for the Medicare program are given to insurance companies to manage the care of beneficiaries. Unlike FFS, the Centers for Medicare & Medicaid Services (CMS) gives lump sum or capitated payments to MA insurers per covered person or beneficiary. The amount of money CMS gives to the insurer depends on a variety of factors which includes how sick the patient is and their geographical location. Ultimately company make more money by spending as little as possible per patient so that they can keep the difference between what they get from taxpayers (as determined by CMS) and what they provide in coverage.

Insurance companies exploited the MA program for years, reaping billions from taxpayers in over- payments while earning significantly more profits per person in MA as compared to their standard private insurance plans for individuals. Figures for overpayments are staggering, as different estimates have found that in single-year periods, insurance companies have been overpaid anywhere between $80-$140 billion. Eliminating these overpayments could cover most (or potentially more than) the required $88 billion in cuts per year over 10 years.

MA insurers reap these overpayments using via different methods.

• One of the primary mechanisms to steal from taxpayers is the practice of upcoding. The insurance companies push clinicians to diagnose patients with more conditions than necessary or that they treat so that they can get larger capitation payments from CMS.

• Another method is insurers using favorable selection. This the practice of choosing to cover healthier patients. They skip over the sicker patient or else increase premiums over time. The patient eventually goes back to traditional Medicare.

Overall, the overpayments result the program never results in saving taxpayers money compared to Traditional Medicare. Consistently, federal spending increases which increases insurance company profits.

A primary challenge to tackling the issue of MA overpayments is the significant political influence of health insurance companies in Congress. A combination of campaign contributions to candidates through political action committees (PACs) and other affiliates. Lobbying and associated expenditures affords the insurance industry significant access to the halls of Congress. Lobbyists in turn flood offices with their priorities and information backing their proposed agenda. A 2024 Kaiser Family Foundation investigation  specifically revealed a significant lobbying campaign by MA insurance companies to stop Congress from shutting off the valve of overpayments.

Critics have watched with alarm as the industry has managed to deflate or deflect financial penalties and steadily gain clout in Washington through political contributions; television advertising, including a 2023 Super Bowl feature; and other activities, including mobilizing seniors. There’s also a revolving door, in which senior CMS personnel have cycled out of government to take jobs tied to the Medicare Advantage industry and then returned to the agency.¹

President Trump has stated that his efforts along with those of DOGE and House Republicans is to eliminate corruption, waste, fraud, and abuse. If this is indeed their goal, the Energy & Commerce Committee can easily identify overpayments to insurance companies within the MA program as waste arising out of corruption. Eliminating these overpayments does not reduce the amount of money insurers need to provide coverage for Medicare Advantage beneficiaries and can protect Medicaid from cuts. The choice is clear: cut overpayments to exploitative insurance companies, not critical coverage for hard working Americans.

New details of the government’s failure to rein in Medicare Advantage overcharges are emerging from a Department of Justice civil fraud case filed in 2017 against UnitedHealth Group, the insurer with the most Medicare Advantage enrollees. The case is pending in Los Angeles. The DOJ has accused the giant insurer of cheating Medicare out of more than $2 billion by mining patient records to find additional diagnoses that added revenue while ignoring overcharges that might have reduced bills.¹  

¹ The Medicare Advantage Influence Machine, KFF Health News, Fred Schulte and Holly K. Hacker. “New court filings and lobbying reports reveal an industry drive to tamp down critics — and retain billions of dollars in overcharges.