Evidence of MA Overpayment Continues to Mount

A recent analysis from the Committee for a Responsible Federal Budget (CRFB) examines the latest projections on Medicare spending to warn of $1 trillion in possible Medicare Advantage (MA) overpayments over the next decade.

MA Enrollment and Costs Rising

CRFB cites a recent report from the non-partisan Congressional Budget Office (CBO) that finds rising MA costs are shifting Medicare spending, squeezing the program and beneficiaries.

MA spending is partly driven by enrollment, which CBO estimates will climb from 51% of all beneficiaries in 2026 to 57% in 2036. During this time, MA will comprise an ever-larger share of Part A and Part B spending, swelling from 54% to 61%.

MA Enrollees Cost More Than OM Enrollees

However, plan payments also play a role. Over the ten-year budget window, CBO expects annual spending per MA enrollee to outpace OM by about 7% (between 5% and 10%), translating into $550 billion in additional costs.

CRFB notes “[t]his difference is largely driven by “upcoding”—where plans increase the number of diagnosis codes to make a patient look sicker to increase payments—which CBO believes leads to about 4% more in costs even after accounting for coding intensity adjustments designed to counter this issue.”

Over the ten-year budget window, CBO expects annual spending per MA enrollee to outpace OM by about 7%.

To look at MA costs more granularly, CBO estimates the federal cost implications of individual enrollment changes; specifically, if someone were to switch from OM to MA. The analysis finds doing so would increase Medicare spending on that enrollee by roughly 15%, caused “primarily by coding intensity and favorable selection.” According to CRFB, this suggests $1 trillion in MA overpayments and $150 billion in higher Part B premiums for all Medicare beneficiaries over the next decade.

MA Overpayment Is Clear

CBO undertook an exhaustive literature review in formulating the report, with all available sources pointing to significant MA overpayment. As they explain, “all published studies of differential coding show that the CMS adjustment does not fully correct for coding differences.”

In January, MedPAC estimated that MA is costing Medicare 14% more in 2026 than OM for similar beneficiaries.

The resulting findings indeed align with other independent, expert analyses. For example, in January the Medicare Payment Advisory Commission (MedPAC) estimated that MA is costing Medicare 14% more in 2026 than OM for similar beneficiaries. CRFB found this divergence would add up to about $1.3 trillion in excess payments over ten years.

Conclusion

The increase in MA spending is a significant trend and cost. In 2025, payments to MA plans ate up more than half of all Medicare program spending—up from 32% in 2015. This cost growth is influenced by enrollment changes: Over the last decade, the share of Medicare beneficiaries enrolled in MA more than doubled. However, it is also significantly attributable to Medicare payment policy, which structurally pays MA plans more per enrollee than the same beneficiaries would cost under OM.

The increase in MA spending is a significant trend and cost.

In addition to inflating Medicare costs, MA overpayments worsen affordability for current and future Medicare enrollees. They increase premiums for everyone, not just people with MA. In 2025, MA overpayments drove up Part B premiums by $212 per person, for a total of $13.4 billion. Taxpayers are also affected. Medicare enrollees pay about 85% of the added premium costs, with the remainder falling on people paying federal (9%) and state (6%) taxes.

Despite promises that MA would save Medicare money, it never has.

Medicare Rights urges policymakers to improve MA payment accuracy. Despite promises that MA would save Medicare money, it never has. The current system rewards insurers with greater profits but penalizes all beneficiaries through higher Part B premiums and taxpayers through increased costs. Absent corrections that center beneficiary needs, these impacts will only deepen.

Read the CRFB report: CBO Analysis Suggests $1 Trillion in Medicare Advantage Overpayments.