Congressional Report Warns of Surging Medicare Premiums Driven by Advantage Plan Overpayments

A new report from the U.S. Congress's Joint Economic Committee has identified a critical flaw in the Medicare funding structure, warning that overpayments to Medicare Advantage plans are significantly inflating premiums for seniors. The findings suggest that the private-sector alternative, intended to lower costs through managed care efficiencies, is instead creating a fiscal burden. Medicare Advantage now covers approximately 55% of all Medicare enrollees. However, the report indicates that in 2025, payments to these plans totaled roughly $84 billion more than what would have been required to provide the same benefits via traditional Medicare, representing 120% of traditional coverage costs. Because the program's financing structure passes approximately 26% to 28% of expenditure increases directly to beneficiaries, these overpayments have a tangible impact on monthly budgets. In 2025, these inefficiencies added $212 per enrollee to Part B premiums, totaling $14.3 billion in additional costs for participants. This trend is reflected in the 2026 Part B monthly premiums, which rose to $202.90 from $185 in 2025. The long-term outlook is stark, with the committee noting that $82 billion has been added to Part B premiums since 2016 due to these overpayments. If current trends continue, the Joint Economic Committee warns that annual premiums could double by 2035, rising from approximately $2,440 to $5,000. This data places increased scrutiny on the reimbursement formulas used for private Medicare Advantage providers and may signal future regulatory adjustments to curb government overspending in the managed care sector.