Millions of seniors paid higher Medicare premiums last year because of overpayments to private insurers in the Medicare Advantage program.
Those excess payments increased Medicare Part B premiums by about $212 per enrollee last year, adding up to roughly $13.4 billion in additional premiums paid by seniors nationwide, according to a new issue brief released on March 10 by the Joint Economic Committee, a bipartisan group of lawmakers that advises Congress on financial issues
Medicare Advantage, also known as Medicare Part C, allows private insurers such as UnitedHealth Group (NYSE:UNH), CVS Health’s Aetna (NYSE:CVS) and Blue Cross Blue Shield plans to provide Medicare coverage, the committee said. Congress originally intended the program to cost less than traditional government-run Medicare.
Don’t Miss:
However, the committee estimates that in the last year the federal government paid Medicare Advantage insurers between $76 billion and $84 billion more than it would have cost to cover the same people under traditional fee-for-service Medicare.
Because Medicare Part B premiums are set to cover about one-quarter of the program’s total costs, higher spending directly results in higher premiums for all enrollees.
“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 Joint Economic Committee Chair David Schweikert, a Republican representative from Arizona.
The brief estimates that covering a beneficiary in Medicare Advantage cost about 17% to 20% more on average than covering the same person in traditional Medicare.
Trending: Skip the Regrets: The Essential Retirement Tips Experts Wish Everyone Knew Earlier.
Those higher premiums are reducing the amount seniors receive from Social Security. For most beneficiaries, Medicare Part B premiums are automatically deducted from their monthly Social Security payments.
The committee estimates that since 2016, Medicare Advantage overpayments have added about $82 billion to total Part B premiums. Of that amount, roughly $6 billion was paid by people enrolled in traditional Medicare who don’t receive the additional benefits offered by Medicare Advantage plans.
