The Medicare Payment Advisory Commission (MedPAC), an independent congressional agency established to advise Congress on issues affecting the Medicare program, has long warned about overpayments to Medicare Advantage (MA) plans. Most recently, in a January 16, 2026 Status Report given to commissioners, the agency noted that for 2026, MA payments are projected to be $76 billion – or 14% more – above what spending would be in traditional Medicare for the same beneficiaries. In the report, the Commission notes that every year it “compares spending on MA to what Medicare would have spent in MA enrollees were instead enrolled in [traditional Medicare]” including “account[ing] for differences in health status, including favorable selection, diagnostic coding differences, geographic distribution, and Medicare service coverage.”
As noted in an article published by Healthcare Dive titled “Medicare Advantage overpayments will total $76B this year: MedPAC” by Rebecca Pifer Parduhn (Jan. 16, 2026), this is “a smaller sum than last year thanks to the continued phase-in of a new risk adjustment model” but it is still “likely to add more fuel to concerns about overpayments in the privatized Medicare program, which has grown to cover more than half of all Medicare enrollees.”
The article goes on to note that MA “insurers are incentivized to exaggerate their members’ health needs to inflate reimbursement from the government, a practice called upcoding” and
MA is also more expensive than traditional Medicare because of favorable selection, when beneficiaries turn out to be healthier than expected. MA enrollees tend to use less medical care than seniors in traditional Medicare, according to research.
In an effort to discredit MedPAC, the Wall Street Journal recently published an op-ed titled “The Trouble With MedPAC” (Feb. 11, 2026) which challenged the Commission’s conclusion that it costs the federal government more to cover a Medicare beneficiary than under traditional Medicare. The editorial board, which goes as far as calling to “defund MedPAC”, is a demonstrated and uncritical supporter of private Medicare Advantage plans, as discussed in a May 2024 CMA Alert.
In a letter to the editor by Matthew Fiedler from the Brookings Institution and Bendic Ippolito from the American Enterprise Institute (AEI) (Feb. 18, 2026), the authors state that the “editorial misses the mark”:
Rigorous research from many studies shows that Medicare Advantage tends to attract beneficiaries who cost less to cover than those who choose traditional Medicare. However, these enrollees appear costlier to Medicare’s “risk adjustment” system because it misses some aspects of health status and because Medicare Advantage plans report diagnoses that would go unreported in traditional Medicare. As a result, Medicare spends substantially more to cover a beneficiary under an Advantage plan than under a traditional plan.
The letter concludes:
There remains room to debate exactly how large these payment differences are and what trade-offs changing payment rates would pose. But there’s little doubt that the federal government spends substantially more to cover a beneficiary under Medicare Advantage than under traditional Medicare [emphasis added].
Policymakers should not be swayed by the insurance industry and their supporters who try to discredit independent data and analysis that highlight problems with Medicare Advantage, including ongoing overpayments.
February 19, 2026 – D. Lipschutz