Medicare Advantage
The private-insurer version of Medicare. Instead of the government paying your doctors and hospitals directly, it pays a private health plan a fixed amount per enrollee to manage all of your care. Marketed for extra perks — dental, vision, low or $0 premiums — it now covers more than half of all people on Medicare.
In Plain Terms
There are two ways to be on Medicare. Traditional Medicare is run by the government: you see almost any doctor, and Medicare pays the bill. Medicare Advantage (Part C) hands your Medicare over to a private insurer — UnitedHealthcare, Humana, CVS/Aetna, and others — which is paid a lump sum each month to cover you, keeps what it doesn't spend, and in return gets to use its own network and its own prior authorizationPrior AuthorizationA health-insurance process that requires your doctor to get advance approval from your plan before it will cover a specific service, procedure, or drug. rules.
The catch is in the payment formula. The plan is paid more for a sicker enrollee than a healthy one. That is meant to be fair — sicker people cost more — but it also creates a powerful incentive to make every enrollee look as sick as possible on paper, and to attract the healthy while shedding the truly expensive. Those two incentives are the whole story of the overpayment.
How It Turns Into Overpayment — Two Levers
1. Upcoding (through "risk adjustment")
Payments rise with an enrollee's documented "risk score." So plans mine charts and run in-home "health-risk assessments" to add every diagnosis they can — whether or not it changes the care delivered. More codes, higher score, bigger check. When the diagnoses don't reflect care actually given, that's upcoding, and it is the single largest documented source of Medicare Advantage overpayment.
2. Favorable selection
Marketing, network design, and prior-authorization friction can quietly steer healthy, low-cost people into a plan while nudging the sickest, most expensive patients back into Traditional Medicare. The plan collects risk-adjusted payments for people who cost less than they're paid for.
The nonpartisan Medicare Payment Advisory Commission (MedPAC) — Congress's own advisory body — estimates Medicare Advantage will cost taxpayers $2,660 more per enrollee in 2026 than if those same people were in Traditional Medicare.
By the Numbers
~54%
of Medicare enrollees now in MA
34.1M
MA enrollees
$2,660
MedPAC est. extra cost per enrollee, 2026
~$2.5T
projected decade of overpayments
Nearly a third of all 34.1 million Medicare Advantage enrollees are in a UnitedHealthcareUnited HealthcareThe largest U.S. health insurer by revenue. UnitedHealth Group operates UnitedHealthcare (insurance) and Optum (pharmacy, data, and physician practices). plan — more than any other insurer.
Documented on AbilityForge
The Medicare Advantage overpayment is not a theory here — it runs through the record as a dollar figure that federal officials keep raising:
- $8.7 billion in a single year from upcoding — Sen. Grassley's letter to UnitedHealth's CEO.
- $2.1 billion the insurer knew stemmed from incorrect diagnoses and left uncorrected — Rep. Jayapal's 29-member amicus brief in United States v. UnitedHealth Group.
- The fix: Rep. Doggett's Saving MEDICARE Act (July 2026) — the first comprehensive bill to end the upcoding formula at the source.
Rep. Jayapal calls it "Medicare DisAdvantage." The pattern is the same one documented throughout this archive: money the program overpays is money that doesn't reach patient care — and the same vertically integratedVertical IntegrationA corporate structure in which a single entity owns the insurer, the PBM, the pharmacy, and the physician group — so it can profit at every step. insurers collecting the overpayment are the ones denying the care.
To Be Fair About It
Many people genuinely like their Medicare Advantage plan — the extra benefits and low premiums are real, and for some enrollees the coordinated-care model works well. The critique here is not that MA enrollees are doing anything wrong; it is that the payment design rewards documenting sickness and selecting for health, so taxpayers pay more while the sickest patients can face the most friction. Fixing the formula is the point — not blaming the people who chose the plan.
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Related Terms
Sources
MedPAC per-enrollee cost estimate, the ~$2.5 trillion decade projection, and the upcoding/favorable-selection mechanics are drawn from the Office of Rep. Lloyd Doggett (July 1, 2026) and MedPAC's reports to Congress. Enrollment figures (34.1M; ~54% of Medicare) per KFF and CMS; UnitedHealthcare share per the Center for Health & Democracy Sunlight Report. Enforcement figures are documented on the Grassley and Jayapal pages.