How do Medicare Advantage overpayments affect Medicare’s finances?
CBO estimates that setting payments to private plans at the same level it would cost traditional Medicare to serve the same beneficiaries would save $54 billion over the next five years and $149 billion over ten years. These are the amounts by which the private plans are overpaid.[7] The Chief Actuary at the Centers for Medicare and Medicaid Services has testified that the overpayments advance the date when the Medicare Hospital Insurance Trust Fund will become insolvent by two years, from 2021 to 2019.[8] Because of the overpayments, restoring solvency will require substantially larger benefit cuts and/or tax increases than would otherwise be needed. In testimony before the Health Subcommittee of the House Ways and Means Committee earlier this year, Glenn Hackbarth, the MedPAC chairman, warned that Medicare faces “a very clear and imminent risk from this overpayment that will put this country in an untenable position.
