Waste, fraud and abuse is alive and well at Medicare Advantage

By Brett Arends

The latest windfall is so generous it has stunned even Wall Street

But don't touch the Wall Street boondoggles.

The Trump administration has just decided to spend another $13 billion of taxpayers' money on a federal boondoggle that already overcharges us $76 billion a year.

The extra money will go to big insurance companies, most of them listed on Wall Street, that are being paid to run the grossly inefficient Medicare Advantage program.

Mehmet Oz, the talk-show doctor who is now the administrator of the Centers for Medicare & Medicaid Services, announced the extra money for the privatized Medicare Advantage program on Monday night, while the country was distracted by the latest chaotic news from the Persian Gulf.

The news sits oddly with this administration's performative chainsaw-wielding claims that it is waging a war against federal "waste, fraud and abuse" and fighting to get a better deal for taxpayers.

The latest windfall is so generous it has stunned even Wall Street, where the stock prices of the private health-insurance giants involved in the program rocketed in response.

Read: Health insurers secured a better Medicare Advantage rate for 2027, and their stocks soared

Medicare Advantage is a program under which the federal government pays private health insurers to operate a parallel program to Medicare. This year the program is expected to cost taxpayers a staggering $615 billion.

Meanwhile, most ordinary Americans struggle to cope with medical costs that are the highest in the world.

The Medicare Payment Advisory Commission, an independent government watchdog also known as MedPAC, says the Medicare Advantage program has been a terrible deal for taxpayers since Day 1.

"Private plans have never been paid less than FFS Medicare," says MedPAC, referring to fee-for-service or traditional, government-run Medicare. "We estimate that Medicare will spend 14 percent - a projected $76 billion - more for [Medicare Advantage] enrollees in 2026 than it would spend if those beneficiaries were enrolled in FFS Medicare," it says. The waste was even higher, over $80 billion, in previous years, MedPACsays.

MedPAC's estimate for overpayments, which was published last month, does not include the extra $13 billion just handed out.

The amount wasted on Medicare Advantage exceeds the total amount the Trump administration allegedly "saved" in its latest budget by cutting other federal programs, from education to Medicaid to the Small Business Administration. The administration's latest budget even boasts about cutting $2 million from a solar-panel program (see page 17 here).

But all these figures are swamped by the $1.5 trillion the administration wants to spend on the "Department of War," as it calls the Defense Department - an increase of $500 billion from a year before. Some sources say the latest military adventure in the Middle East is costing $1 billion per day.

As you would expect, the big for-profit health insurance companies deny that Medicare Advantage is a terrible waste of taxpayers' money. Their trade association, AHIP, cites research defending the program. Some of the research was commissioned by AHIP. Some was written by AHIP staff.

Why MedPAC, an independent watchdog established by Congress and made up of medical and healthcare experts including insurance company representatives, would make up malicious lies about Medicare Advantage is not clear.

AHIP, which is financed by the health-insurance industry, has revenues of $78 million a year, and in 2024 it paid nine executives more than $500,000 a year each, including $1.5 million for CEO Mike Tuffin. Last year it spent $17 million on lobbyists. It could not be reached for comment.

Meanwhile, keep an eye on all that "waste, fraud and abuse" in "woke" programs, some of which may cost U.S. taxpayers a few million dollars.

-Brett Arends

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04-08-26 1108ET