Medicare is running out of money, with insolvency projected by 2033. While lawmakers, providers, and regulators acknowledge the looming crisis, little is being done to address one of the biggest drivers of waste: Medicare Advantage.
As Charles Sauer writes in InsideSources:
“One of the most significant issues is Medicare Advantage, which combines private plans with traditional Medicare benefits. In theory, Medicare Advantage should deliver better care at lower costs through private-sector competition. Instead, the program is growing out of control due to overbilling by insurers.”
The problem lies in upcoding—when insurers and even doctors exaggerate patient diagnoses to maximize federal payments. Sauer explains:
“Doctors frequently exaggerate the severity of other conditions or opt for the most expensive diagnosis to use. This means bigger government checks and increased profits for insurance companies. It also means higher prices across our healthcare system.”
Improper payments have soared. In 2024 alone, Medicare Advantage paid out nearly $19 billion in improper claims. A government watchdog found that $7.5 billion in payments came from questionable health risk assessments—questionnaires filled out by patients at sign-up.
“Worst of all, the government doesn’t consistently verify these diagnoses, meaning billions of taxpayer dollars are spent on phantom care for phantom conditions, going virtually unchecked with limited oversight.”
If left unchecked, Medicare Advantage threatens to bankrupt the entire program. Enrollment is expected to rise by over 50 percent in less than a decade, which will accelerate the problem.
Sauer argues for reforms such as:
- Ending upcoding by requiring independent verification of billing diagnoses.
- Fixing the risk adjustment model through legislation like the NO UPCODE Act, which could save taxpayers billions.
- Free-market reforms that encourage insurers to compete on value rather than risk-score manipulation.
As Sauer concludes:
“Medicare isn’t another budget line item for insurance companies; it’s a lifeline for millions of seniors. Without serious reform to stop fraudulent billing, it will become another cautionary tale of a government program undermined by its design and exploited by those who know how to work the loopholes.”
Congress has a choice: protect Medicare for seniors—or continue letting insurers drain it dry.
