Congressional Joint Economic Committee Pegs Medicare Advantage Overpayments at $7 Billion Annually and Rising

According to Kiplinger, the Congressional Joint Economic Committee found Medicare Advantage is overpaying insurers by $212 per enrollee. The figure looks small until you scale it.

The data, scaled

Multiply $212 against roughly 33 million Medicare Advantage enrollees and the system is leaking about $7 billion a year in excess payments to private insurers. Medicare Advantage now covers more than half of all Medicare beneficiaries, which puts the overpayment in the middle of the program rather than at its edges.

Where does the $7 billion go? Some flows into insurer margins, helping explain why publicly traded MA carriers rank among the largest U.S. healthcare companies. The rest funds supplemental benefits that drive MA marketing: dental, vision, hearing, gym memberships, and grocery cards traditional Medicare excludes.

The overpayment is structural. It originates in three mechanics: risk adjustment coding incentives that reward plans for documenting more diagnoses, the benchmark methodology CMS uses to set county-level payment rates, and upcoding, where plans capture diagnoses traditional fee-for-service claims would never have generated.

The context Kiplinger does not provide

Industry data confirms the pattern. Modern Healthcare reported $33 billion in extra payments to Medicare Advantage plans tied to coding intensity, with UnitedHealth (NYSE:UNH | UNH Price Prediction) and Humana (NYSE:HUM) the primary beneficiaries. CMS has been tightening risk adjustment audits, and several major insurers have faced DOJ investigations over coding practices. A Leerink report indicates UnitedHealth faces the largest RADV audit exposure, with 60 contracts covering 92% of its 2020 Medicare Advantage membership under review.

The political response cuts the other way. CMS announced a 2.48% average increase in Medicare Advantage payments for 2027, sending $13 billion in additional funding to private insurers, well above the 0.09% rate originally proposed in January 2026 that briefly knocked Humana down more than 20%.

How to act on it

For a healthy 68-year-old in a mid-cost metro area, the choice between a $0-premium MA plan and traditional Medicare paired with Plan G Medigap and Part D depends on health trajectory and network flexibility.

• Moderate use: The $0-premium MA plan typically wins on annual cash outlay. Premiums are nil, primary care copays run low, and dental and vision are bundled. Annual out-of-pocket commonly lands in the low four figures.
• Major health event: Plan G Medigap caps exposure near the Part B deductible. MA enrollees face prior authorization and a maximum out-of-pocket that often runs $5,000 to $9,000 in-network, with higher exposure out-of-network.

Healthy retirees who stay in-network and value the extras tend to come out ahead in MA. Retirees with chronic conditions, frequent travelers, and those who want unrestricted specialist access generally do better with traditional Medicare and Medigap, despite higher monthly premiums.

The takeaway

The $212 figure represents the hidden subsidy behind your neighbor’s free dental coverage. As CMS audits tighten and DOJ scrutiny continues, expect supplemental benefits to thin and marketing to soften. If your plan choice hinges on those extras, price the alternative now, before the subsidy that funds them gets reformed.