A Joint Economic Committee investigation found that that overpayments to Medicare Advantage increased seniors’ Medicare Part B premiums by $13.4 billion in 2025, even those who aren’t enrolled in the program. The Wall Street Journal first reported the findings.
The Part B Premium Pass-Through: Medicare Advantage Overpayments Inflate Premiums for All issue brief said that the premiums are meant to cover approximately 25 percent of expected spending but higher Medicare Advantage costs translate directly to higher premiums for the entire population.
The report was prepared by the Republican majority staff of the U.S. Congress Joint Economic Committee (JEC), a bipartisan group of senators and representatives that advise Congress on financial matters and was released after The Wall Street Journal published an article about the findings. .
Although Congress intended for Medicare Advantage to cost less than government-run, traditional fee-for-service Medicare, in 2025 the federal government paid Medicare Advantage insurers an estimated $76 billion to $84 billion more than it would have cost to cover the same beneficiaries in traditional Medicare, according to the report.
Key findings
The issue brief found:
- Medicare Advantage is overpaid by about 20 percent compared to traditional Medicare. The JEC relied on Medicare Payment Advisory Commission estimates that covering beneficiaries in MA costs 120 percent of what it would cost in traditional Medicare generating $84 billion in excess payments in 2025.
- These overpayments raised Part B premiums by $212 per person in 2025, totaling $13.4 billion in additional premiums. Since 2016, Medicare Advantage-related premium increases have added $82 billion to beneficiaries’ costs. Traditional Medicare enrollers alone carried about $6 billion of this burden in 2025.
- The higher premiums reduce Social Security checks. Because about 70 percent of beneficiaries have premiums deducted directly from Social Security, the increased premiums effectively shrink monthly benefit payments. Roughly 85 percent of the premium burden falls on individuals, with the rest picked up by state and federal taxpayers.
- Premiums are becoming less affordable. Per-person Part B premiums are projected to double between 2025 and 2035—from $2,440 to about $5,000. If current Medicare Advantage overpayment trends continue, approximately $450 of the 2035 premium would be due to overpayments.
- Uneven geographic impact. Because Part B premiums are national, but Medicare Advantage enrollment varies locally, regions with low Medicare Advantage penetration (e.g., Wyoming) bear disproportionately large burdens for benefits they don’t receive.
- Taxpayers also absorb higher costs. About nine percent of excess premiums are paid by federal taxpayers and six percent by states, mostly through Medicaid programs that cover premiums for low-income beneficiaries.
“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. 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,” said Rep. David Schweikert (R-Ariz.), who serves as chair of the JEC, in an announcement.
The brief says that aligning Medicare Advantage payments with traditional Medicare costs would lower Part B premiums for all 50 million beneficiaries, reduce pressure on Social Security benefits, improve Medicare affordability, and save the average senior about $2,600 over the next decade.
Industry reaction: Report is based on flawed data
A spokesman for AHIP, a health insurance industry trade group told The Wall Street Journal that the report findings were based on “fundamentally flawed data, methodology and extrapolations” and shouldn’t dictate policy.
The Better Medicare Alliance, a research and advocacy organization that supports Medicare Advantage, agreed, stating that the findings are based on disputed estimates from MedPAC.
“Presenting those estimates as settled fact misrepresents how the program works and risks misleading policymakers and seniors about a program that more than half of Medicare beneficiaries now choose,” said Mary Beth Donahue, president and CEO of the Better Medicare Alliance in a statement.
She claims that more recent analyses from Centers for Medicare & Medicaid Services experts show that the differences in diagnostic coding between Medicare Advantage and traditional Medicare are far smaller than MedPAC’s estimates suggest.
“Claims that Medicare Advantage ‘overpayments’ significantly increase seniors’ Part B premiums stem directly from those disputed assumptions. When more current data and updated risk-adjustment models are used, the magnitude of those claims falls dramatically,” she said.
Donahue said policy discussions about Medicare should be based in accurate, up-to-date data and must focus on strengthening Medicare Advantage coverage instead of “repeating outdated claims that undermine confidence in and stability of a program that continues to deliver for America’s seniors.”