Why Your Medicare Premiums Are $200 Higher Than They Should Be
Here's how overpayments to Medicare Advantage plans are driving up Part B costs for every Medicare beneficiary.
The promise of Medicare Advantage has always been "more for less" — extra benefits like vision and dental at a lower cost to the government. But according to the latest Joint Economic Committee report, the math is heading in the opposite direction. By exploiting "coding intensity" and risk-adjustment loopholes, private Medicare Advantage (MA) plans are now costing the taxpayer 20% more than original Medicare for the same level of care.
This fiscal gap doesn't just impact the federal deficit; the alleged overpayments trigger a mandatory "premium pass-through" that forces those in original Medicare to subsidize the gym memberships and dental perks of their neighbors in MA plans.
The cost of the overpayments to beneficiaries
A new JEC study, "The Part B Premium Pass-Through," examines how the higher cost of Medicare Advantage is being passed on to all Medicare enrollees. The report, based on data from the Medicare Payment Advisory Commission (MedPAC), finds that because MA plans cost the government roughly one-fifth more per person than original Medicare, the resulting "overpayments" are triggering higher Part B premiums across the board.
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According to the JEC, MA overpayments in 2025 increased individual Part B premiums by an average of $212 per enrollee and added $13.4 billion in additional premiums.
Basic Part B premiums cover roughly 25% of the program's total expected costs; that means that any increase in spending, including overpayments to MA plans, results in a premium hike for all beneficiaries, regardless of whether they are in MA or original Medicare. Since most seniors have their Part B premiums deducted directly from their Social Security checks, these overpayments effectively shrink monthly take-home benefits.
Without a course change, the JEC warns that this "pass-through" is set to more than double. Projections suggest that by 2035, roughly $450 of a senior's annual Part B premium could be attributed solely to MA overpayments. To safeguard the program’s long-term health and protect Social Security benefits, the committee recommends a "fiscally sustainable" shift: bringing private plan payments back in line with original Medicare costs.
Why are the plans overpaid?
The central finding of the recent report from the Joint Economic Committee (JEC) was that overpayments to MA plans — estimated to be roughly 20% higher than the cost of covering the same individual in original Medicare — are directly driving up the Part B premiums paid by every beneficiary.
The committee identified two health-insurer practices as the primary drivers, including:
- Coding intensity: Plans often record extra or more severe diagnoses for members to trigger higher risk-adjusted payments from the government often referred to as "upcoding."
- Favorable selection: MA plans tend to attract healthier enrollees who cost less to care for, but payment benchmarks are often based on the higher average costs of original Medicare.
The Justice Department is actively tracking upcoding and "code intensity" issues. In January 2026, Kaiser Permanente affiliates agreed to a $556 million settlement to resolve allegations that they violated the False Claims Act from 2009 to 2018. The settlement involved six whistleblower cases. The DOJ alleged that Kaiser inflated Medicare Advantage reimbursements by submitting invalid diagnosis codes, by pressuring physicians to retroactively add diagnoses via medical record “addenda." Kaiser settled, but did not acknowledge wrongdoing.
The impact can also be seen through a regional lens
The geographic variation is primarily driven by two factors: Medicare Advantage plan penetration rates, the percentage of eligible seniors in an area who choose private MA plans, and local income distributions.
In high-penetration states such as Florida (56%), Alabama (59%), and Michigan (62%), where more than 50% of Medicare beneficiaries are enrolled in MA, the total dollar amount of overpayments is significantly higher. However, because the Part B premium is a national standard, the cost per person ($212) remains consistent regardless of where you live — but the "redistribution" of funds is more pronounced in these areas.
The report notes a distinct regional transfer of wealth. Residents in states with lower MA enrollment, such as Wyoming (18%), Vermont (32%), or Alaska (3%), are effectively subsidizing the extra benefits and perks enjoyed by MA enrollees in high-enrollment states.
Overpayments drive up costs for all taxpayers
As the gap between Medicare Advantage costs and original Medicare spending continues to widen, the pressure on the Part B premium will only intensify. The JEC projects that without significant reform to how private plans are compensated, the annual "overpayment surcharge" could more than double to $450 by 2035. Let's not forget that Part B premiums went up almost 10% from 2025 to 2026. The 2025 Trustee's report projected that this premium could reach $347.50 by 2034.
For retirees living on a fixed income, protecting the integrity of their Social Security check may soon depend on a fundamental realignment of how we pay for private MA coverage within the Medicare system. Overpayments can also hurt the Supplemental Medical Insurance trust fund that pays Part B premiums and is financed by general revenues and the premiums enrollees pay. In reality, if you pay income taxes, you are also paying more to offset the overpayments, not just those who currently pay Medicare Part B premiums.
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