• World News
  • Politics
  • Stock
  • Investing
  • Editor’s Pick
Time And Sales Reporter
Editor's PickInvesting

MedPAC Identifies Medicare Advantage Pricing Errors, Savings Opportunities

by March 14, 2025
March 14, 2025

Michael F. Cannon

A hot-off-the-presses report from the Medicare Payment Advisory Commission (MedPAC) finds plenty of excessive Medicare spending for Congress to cut—in large part because the program sets excessive prices for health insurance (as it does for everything else).

Traditional Medicare sets and pays hundreds of thousands of prices for separate goods and services. MedPAC has long documented excessive prices for specialty care, skilled nursing facilities, cataract removal, evaluation and management visits, et cetera, ad nauseam.…

MedPAC’s latest report shows Medicare performs no better when it sets and pays prices for private health insurance. More than half of Medicare enrollees now choose to get their Medicare subsidy through private insurers via the Medicare Advantage program. Unlike traditional Medicare, Medicare Advantage sets and pays a single price for each enrollee: the total premium that an insurer receives for covering that enrollee. 

MedPAC: More than half of eligible Medicare enrollees now choose Medicare Advantage

MedPAC: More than half of eligible Medicare enrollees now choose Medicare Advantage

MedPAC finds: 

Both favorable selection and coding intensity lead to pricing errors that cause [Medicare] to set the payment rate too high for a given [Medicare Advantage] enrollee.

(I would say that selection and upcoding reflect government mispricing errors, but you get the idea.) 

Those pricing errors are significant: 

In 2025, we estimate that Medicare will spend about 20 percent more for MA enrollees than it would spend if those beneficiaries were enrolled in FFS Medicare, a difference that translates into a projected $84 billion.

This figure shows how this “Medicare Advantage markup” (my words, not MedPAC’s) has grown over time:

MedPAC: Higher MA payments relative to what estimated spending would have been in FFS since 2007

Source: MedPAC

The excess burden that Medicare Advantage imposes on taxpayers has exploded by 400 percent over the past decade.

MedPAC: Medicare Advantage mispricing errors to increase spending by $84 billion in 2025

MedPAC: Medicare Advantage mispricing errors to increase spending by $84 billion in 2025

Indeed, all that extra spending is why Medicare Advantage enrollment has exploded. Switchers know that on average they’ll get a 20-percent-larger subsidy than they would in traditional Medicare. 

How do they know? Medicare Advantage plans compete to capture that $84 billion by offering “nonmedical supplemental benefits” that differentially appeal to relatively healthy enrollees, whom insurers know will cost less than the government is paying. You know, stuff like “nonemergency transportation services, assistance paying for over-the-counter items, meals, and gym memberships.” Your tax dollars are even paying private health insurance companies to offer groceries, hair care, pet care, complementary therapies, and structural home improvements. 

Non-medical benefits that Medicare Advantage plans offer to take advantage of government mispricing errors

Non-medical benefits that Medicare Advantage plans offer to take advantage of government mispricing errors. Source: ATI Advisory.

Medicare Advantage has its defenders, including private insurers and the least-needy Medicare enrollees. Why wouldn’t they defend this gravy train? Then there are Republicans, who (for some reason) reflexively defend government-enlarging subsidies for private insurers. 

Unfortunately, the only defense they offer—that all that excess spending buys better health care—does not hold water. MedPAC surveyed the literature on whether that’s true. They found lots of conflicting studies and determined the evidence was “inconclusive.” So there are plenty of studies for Medicare Advantage apologists to cherry-pick. But the more likely explanation is that they have other reasons for defending $84 billion in excessive spending. Like, they’re profiting from it. Or, they’re afraid to offend the politically powerful special interests who are.

But surely, Republicans can cut Medicare subsidies for gym memberships and pet care.

previous post
The Crypto Industry Should Not Seek to Punish Its Competition
next post
‘We have never been this close to peace’ since Russia invaded Ukraine, Leavitt tells reporters

Related Posts

RemSense Capital Raising

August 4, 2025

Tech 5: Tesla and Samsung Strike Deal, Palo...

August 3, 2025

JPMorgan marks 1,000th branch opening since 2018 expansion...

August 2, 2025

Crypto Market Update: Markets Pull Back After Fed...

August 2, 2025

Silver Crown Provides Corporate Update

August 2, 2025

Albemarle Swings to Profit, Lowers Spending Amid Prolonged...

August 2, 2025







    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.




    Recent Posts

    • Kamala Harris back in national spotlight as James Comer floats subpoena in Biden ‘cover-up’ probe

      August 4, 2025
    • Dr. Oz touts investment in Medicaid: ‘I’m trying to save this beautiful program’

      August 4, 2025
    • Trump accuses Senate Democrats of using nominee confirmations as leverage for funding deals

      August 4, 2025
    • RemSense Capital Raising

      August 4, 2025
    • Trump 1.0 alums share chilling Google message from before second-term return: ‘LAWFARE at its finest’

      August 3, 2025
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Copyright © 2025 timeandsalesreporter.com | All Rights Reserved

    Time And Sales Reporter
    • World News
    • Politics
    • Stock
    • Investing
    • Editor’s Pick

    Read alsox

    Moving Fast, Breaking Things, and the Oath of...

    February 5, 2025

    Sanders and Hawley Are Wrong on Rate Caps

    February 18, 2025

    Another Misguided US Attack on the World Trade...

    March 28, 2025