Medicare Advantage, the privately run version of the government’s Medicare program for persons aged 65 and older, is in need of a drastic overhaul. That is the view of critics, who point out that while insurers such as UnitedHealth Group have deep pockets, the Medicare Hospital Insurance Trust Fund is projected to be depleted in 2036, according to the nonprofit KFF. 

Left alone, Medicare Advantage risks making the overall costs in Medicare unsustainable, both for the government and the American people, according to numerous experts interviewed by the Sun.

Premiums for Medicare’s Part B plan — which covers visits to doctors, outpatient care, preventative services such as vaccines, medical equipment such as wheelchairs — will increase by about 6 percent to $185 a month in 2025, the Centers for Medicare & Medicaid Services announced in November. 

Although the agency expects that average Medicare Advantage premiums will decrease in 2025, average drug deductibles and maximum out-of-pocket costs are poised to grow. For example, KFF finds that the average drug deductible charged by Medicare Part D plans, a voluntary benefit which helps cover the cost of prescription drugs, is increasing four-fold to $225 in 2025 from $59 in 2024. 

Medicare Advantage plans may fill some coverage gaps and offer additional benefits, such as dental care, vision care, and transportation benefits. Offered by contracted private insurers, Medicare Advantage typically has lower premiums and optional coverage, while traditional Medicare often offers more flexibility when it comes to choosing doctors.

The nation’s largest provider of Medicare Advantage is UnitedHealthcare, whose chief executive, Brian Thompson, was murdered last week. The shooting suspect, Luigi Mangione, may have motivated by resentment at what he called “parasitic” health insurance companies. The publicly traded UnitedHealth Group is the eighth most profitable company in the world, as of July 2024.

History suggests that improving public health and improving access to health insurance are not synonymous. The Affordable Care Act, signed into law by President Obama in 2010, has expanded health insurance coverage and pushed down uninsured rates. But the national average monthly premium paid in the individual market more than doubled between 2013 to 2019, according to the Heritage Foundation. 

Even as the Congressional Budget Office expects federal spending on healthcare to reach $1.6 trillion this year and $2.8 trillion by 2034, life expectancy has been declining in recent years, and so has consumer satisfaction.

Subsidies to buy insurance from the Affordable Care Act marketplaces are set to expire at the end of 2025. President-elect Trump and Congressional Republicans have signaled they are unlikely to extend them. Trump has also made it clear he won’t cut Medicare or Medicaid, although improving the efficiency of the agency will likely be a priority. 

Trump’s nominee for director of the Centers for Medicare & Medicaid Services, Dr. Mehmet Oz, has espoused “Medicare Advantage For All.” Dr. Oz argued in a 2020 Forbes op-ed that putting all seniors into private insurance plans under Medicare Advantage would engender “a golden age in health-care delivery.” 

On Tuesday, however, top Democratic senators wrote a letter to Dr. Oz expressing concerns about his “previous advocacy for Medicare privatization,” asserting that “private insurers that run the Medicare Advantage program drastically overcharge for care.”

Overpayment is a problem. The Center for American Progress finds that Medicare Advantage plans were overpaid by between 22 percent and  39 percent, corresponding to between $83 billion and $127 billion dollars, in 2024. 

Private plans are now eligible for 55 percent of all Medicare enrollees, and the federal government pays Advantage plans an average of $2,329 more per beneficiary than what spending would have been in traditional Medicare, according to scholars Paul Ginsburg and Steve Lieberman at the University of Southern California’s Schaeffer Center for Health Policy & Economics.

A phenomenon called upcoding, which makes patients appear sicker than they actually are and therefore receive higher payments, is contributing to $50 billion in overpayment for Medicare Advantage.

“There’s a great incentive for Medicare Advantage plans to make sure that they’re coding everything possible, regardless of differences from coding in traditional Medicare,” Mr. Lieberman, who has served in various government roles including at the Centers for Medicare and Medicaid Services, tells the Sun. 

“For example, in traditional Medicare, the bill for a patient seeing a general internist to manage her diabetes whose congestive heart failure was treated years ago but is now well-controlled would include just the diagnosis for diabetes,” Mr. Lieberman says. “In Medicare Advantage, both conditions might be coded, with the effect of increasing the revenue stream.” 

Medicare Advantage payments are calibrated to pay plans based on the average cost of expected healthcare spending for a person with similar health characteristics, not necessarily the individual’s actual healthcare needs. Patients with identical risk scores — which are generated based on their demographics and their health status — can cost wildly different amounts. This creates an inequality in which 5 percent of the population accounted for nearly half of all health spending.

Another factor in overpayment to Medicare Advantage is a selection bias toward enrolling healthier individuals who are likely to spend less on healthcare, resulting in higher profits for the plans. 

 “You can have people who have congestive heart failure, who cost nothing, and you can have people who have congestive heart failure who cost tens of thousands of dollars because they’re being hospitalized,” Mr. Lieberman explains.

Enrollees, meanwhile, lack freedom of choice in how they interact with the system. 

“The American public has been forced into a kind of health insurance that puts a rope around their neck from day one,” says New York Sun columnist Betsy McCaughey, who founded the Committee to Reduce Infection Deaths, a campaign to stop hospital-acquired infections. “Their health insurer controls every decision, including what doctor they see.”

As it stands, most healthy Americans would be better off sticking with Traditional Medicare than buying into Medicare Advantage and lacking choices in doctors, Ms. McCaughey says. She adds that she hopes the Trump administration will carve a large place in the marketplace for major medical health insurance, by which people pay out of pocket for routine care with their preferred doctor, and only when they need surgery, hospitalization, or medications does insurance kick in.

Plus, it’s difficult for enrollees who want to purchase supplemental coverage, known as Medigap, to exit Medicare Advantage. When one first becomes a Medicare beneficiary, all the Medigap plans must accept them and can’t vary the premiums based on their health status. But if one wants to leave Medicare Advantage, Medigap insurers are not required to accept them, and can charge very high premiums if they do. 

“That creates an unfairness where once people go into Medicare Advantage, it’s very hard for them to leave,” Mr. Lieberman says.

Dissatisfaction with the healthcare system is widespread: healthcare expenses are the No. 1 cost of concern to American families, and a quarter of adults say they’ve skipped or postponed getting care due to the price tag, according to KFF.

It doesn’t help consumers that the system is facing a scarcity of physicians. The Association of American Medical Colleges projects that the nation will be short up to 86,000 physicians by 2036, highlighting the need for investment in training new ones to meet the needs of a growing and aging population. Meanwhile, a growing number of physicians want to retire early, driven by economic concerns, burnout, and the Covid-19 pandemic.

“Congress has to pass a bill to increase the number of education slots in medical school so that there are more doctors being produced,” Mr. McCaughey says. “In the meantime, we have to revise our legal immigration tenets to allow more doctors to come in from other countries who are highly trained and can provide medical care.”

In terms of Medicare, the Trump administration could amend the rules of the road to make the marketplace more competitive and give seniors greater autonomy, with manifold benefits. 

“If you give seniors more choice, it’s going to naturally bring down costs,” the director of a center on the federal budget at the conservative think tank, the Heritage Foundation, Richard Stern, tells the Sun. “It’s going to force the insurers to compete with each other, so they’re going to offer better products.”

“It’s like if I have one gas station on a corner and I add a second gas station to the corner, gas prices will probably come down,” Mr. Stern says,  “and the consumers in town are going to have an easier time getting their hands on gasoline.”