Millions of seniors paid higher Medicare premiums last year because of higher payments to private insurers in the Medicare Advantage program.
Those extra payments increased Medicare Part B premiums by about $212 per enrollee last year, adding to about $13.4 billion in extra premiums paid by seniors nationwide, according to a new issue released March 10 by the Joint Economic Committee, a bipartisan group of lawmakers that advises Congress on fiscal issues.
Medicare Advantage, also known as Medicare Part C, allows private insurers such as United Health Group (NYSE: UNH ), CVS Health Aetna (NYSE: CVS ) and Blue Cross Blue Shield to provide Medicare coverage, the committee said. Congress originally intended the program to be less expensive than traditional government-run medicine.
Don’t miss:
However, the committee estimates that last year the federal government paid Medicare Advantage insurers between $76 billion and $84 billion more to cover the same people under traditional fee-for-service Medicare.
Because Medicare Part B premiums are set to cover about a quarter of the program’s total costs, higher costs directly result in higher premiums for all enrollees.
“Let’s be honest about the math, when Medicare benefits are overpaid, that money doesn’t just go away, it shows up in the Medicare Part B premiums that seniors pay each month, including those paid by traditional Medicare beneficiaries who don’t get additional benefits,” said the chairman of the Joint Economic Committee. David Schweickerta Republican representative from Arizona.
Short estimates that covering a beneficiary in Medicare Advantage costs an average of 17% to 20% more than covering the same person in traditional Medicare.
Tendency: Skip the Regrets: Essential Retirement Tips Experts Wish Everyone Knew Before.
These higher premiums reduce the amount that seniors receive from Social Security. For most beneficiaries, Medicare Part B premiums are automatically deducted from their monthly Social Security payments.
The committee estimates that since 2016, Medicare Advantage overpayments have added about $82 billion to total Part B premiums. Of that amount, nearly $6 billion was paid by people enrolled in traditional Medicare who did not receive the additional benefits offered by Medicare Advantage plans.
