NRLN President’s Forum 
By Bill Kadereit

Medicare Payment Advisory Commission (MedPAC), the nonpartisan agency reporting to Congress, recently estimated that MA overpayments added $82 billion to taxpayers’ costs for Medicare in 2023 and $612 billion between 2007 and 2024. Two insurer strategies drive MA overpayments: diagnosis upcoding and avoiding enrollees who are ill and do not contribute to profits.

Although MA insurers must accept all applicants in counties where they offer a plan, they are also free to withdraw from counties where they are accumulating unprofitable enrollees.

Only 2% of Fee-for-Service (FFS) Medicare expenditures go for overhead. But MA insurers incur extra expenses for television advertisements, health care network management, benefit design, executive salaries, health care utilization review, prior authorization, and shareholder profits, driving their overhead up to 14%. 

This is according to a report from Milliman, an international actuarial and consulting firm, on MA financial results for 2022. Milliman estimates applied to subsequent years’ payments, MA overhead for 2007 to 2024 totals $592 billion—equivalent to 97% of taxpayers’ $612 billion overpayments to them during that period.

The authors closed their analysis stating, “A smarter, thriftier way to expand benefits and lower out-of-pocket costs is possible for all Medicare beneficiaries, but first, we must eliminate MA and double down on traditional Medicare, covering all enrollees in an expanded and improved Medicare program. That would be a good deal for patients and taxpayers.”

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