Medicare Advantage Costs and Growth Largely Unexamined 

A new KFF report examines the increased role of Medicare Advantage (MA) in the coverage landscape and the potential impact of Trump administration policies on MA enrollment and cost growth. The paper comes as Congress considers President Trump’s nominee to lead the Centers for Medicare & Medicaid, Dr. Mehmet Oz. 

Medicare Advantage’s Growing Role in Coverage 

The share of Medicare beneficiaries with MA has more than doubled since 2010. KFF notes that while this enrollment growth is likely due to many factors, “none may be greater than the appeal of potentially lower costs and extra benefits like dental coverage and debit cards, offered by Medicare Advantage plans and aggressively marketed by brokers and insurers.” However, these enticements are largely paid for by inflated payments to MA plans. 

Public Medicare dollars are funding ‘extras’ for MA enrollees that are not available to people with Original Medicare.

In other words, public Medicare dollars are funding “extras” for MA enrollees that are unavailable to people with Original Medicare. According to a recent report from the Medicare Payment Advisory Commission (MedPAC), an independent agency that advises Congress on Medicare payment issues, Medicare overpayments are “the primary source of funding for supplemental benefits…and better financial protection for MA enrollees relative to beneficiaries in FFS.”  

In 2025, MedPAC estimates that Medicare will pay 20% more for MA enrollees than for similar people enrolled in Original Medicare, at a cost of $84 billion.

The overpayments are staggering. In 2025, MedPAC estimates that Medicare will pay 20% more for MA enrollees than for similar people enrolled in Original Medicare, at a cost of $84 billion. These excess dollars have system-wide implications, raising taxpayer costs and Part B premiums—by about $13 billion this year alone—while worsening Medicare sustainability for current and future enrollees.  

Key Questions Policymakers Should Address 

Critically, the shift towards MA is occurring even though information about how the plans work for people is limited, and much of what we do know is concerning. Further, it is happening in a largely unexamined way. KFF raises important and increasingly urgent questions about MA that policymakers are simply not debating:  

“Should the payment system for Medicare Advantage plans be modified, and if so, how and to what end? What should the role of traditional Medicare be nationwide and in rural areas where fewer beneficiaries are enrolled in Medicare Advantage? Should traditional Medicare be strengthened, with additional benefits and an out-of-pocket cap, so beneficiaries have a meaningful choice when comparing Medicare coverage options? What more should be done to help beneficiaries understand the tradeoffs between traditional Medicare and Medicare Advantage, including the potential for extra benefits and lower costs in Medicare Advantage versus challenges that may arise due to limited provider networks and prior authorization requirements?” 

Congress and the Administration’s Policy Choices 

The new Congress and administration will have the opportunity to consider these issues and pursue policy changes aligning with their vision. For instance, KFF suggests policymakers could choose to prioritize savings and efficiencies, including by improving MA payment accuracy through the annual rate notice, “ending the quality bonus program that increases Medicare spending by nearly $12 billion a year or capping Medicare Advantage benchmarks at 100 percent of local traditional Medicare costs except in areas with low Medicare Advantage penetration.” Instead, they may focus on further increasing MA’s footprint, payments, and costs, such as by rolling back beneficiary protections against aggressive MA marketing or testing ways to make MA the default enrollment option. 

Dr. Oz is expected to help shape the path forward if he is confirmed. But his immediate goals are not yet clear. Although he has been a vocal supporter of MA, having “promoted Medicare Advantage in co-authored papers, interviews and on his television show,” in his March 14 confirmation hearing before the Senate Finance Committee, he acknowledged problems with MA overpayments and pledged to scrutinize some MA abuses.  

While MA policy directions are unsettled, it is clear they deserve serious and public debate.

The Need for a Public Debate on MA Policy 

While MA policy directions are unsettled, they clearly deserve serious and public debate. At Medicare Rights, we want people with Medicare to have access to coverage that works for them. But we are deeply concerned that MA plan payments and behaviors are driving up the cost of health care for people with Medicare, their families, and all taxpayers, as well as fueling enrollee problems with understanding, navigating, and accessing care. These dynamics will only entrench as MA plan and enrollment numbers grow, and both are surging. Congress and the administration must effectively respond to these realities and to the concerns many have about rising Medicare costs, the program’s future, and the need for solutions. 

Read the KFF report, Will the Trump Administration Fast Track the Privatization of Medicare? 

Read MedPAC’s March 2025 Report to Congress. 

Learn more from Medicare Rights about MA, including how MA plans are paid and the resulting cycle of enrollment.