The cost of Medicare is going up, especially for those seniors enrolled in Medicare Advantage plans. Why these plans in particular?

Christopher Weaver and Anna Wilde Mathews, writing in The Wall Street Journal, tell us that the average American senior’s Medicare premiums last year were about 10% higher, or more than $200 annually, because of alleged overpayments to private Medicare Advantage plans, congressional investigators found. Medicare Part B premiums that most seniors pay were partly pushed up by controversial health-insurer practices such as adding diagnoses to trigger higher payments, according to the Joint Economic Committee, a bipartisan group of lawmakers that advises Congress on financial matters.

Overpayments to Medicare Advantage insurers increased Part B premiums by $13.4 billion in 2025, the committee said, a cost mostly borne by seniors. Both those enrolled in Medicare Advantage plans and those in standard Medicare faced those additional costs.

This story was first reported by these same authors in 2024 and I posted a blog concerning this called Home Nursing Visits Bilking Medicare for Billions. They discovered that insurance companies were instructing their home nurses who visited Medicare Advantage patients to add diagnoses to the patient record whenever possible to increase payments from the federal government. Later, in early 2025, they also reported similar activity by doctors working for the UnitedHealth Group. They revealed that the insurer had prepared checklists for potential diagnoses even before the patients were examined, as if the doctors needed to be educated!

Why would they encourage adding diagnoses?

More diagnoses make for higher scores—and larger payments. A Wall Street Journal analysis found sickness scores increased when patients moved from traditional Medicare to Medicare Advantage, leading to billions of dollars in extra government payments to insurers.

This latest report from these investigative journalists shows that more diagnoses means more money for insurance companies and higher payments from Medicare and higher premiums from seniors.

Lawmakers and government investigators have been probing how insurers’ billing practices have contributed to Medicare Advantage costs. A congressional watchdog found Medicare Advantage costs the federal government more than traditional Medicare, partly because of insurers’ billing practices. The insurers are paid more to cover enrollees who have more health conditions, and they can boost their reimbursement by recording more diagnoses.

The average Medicare beneficiary paid $212 extra in 2025 due to Medicare Advantage “overpayments,” the committee said. Medicare recipients with higher incomes pay higher premiums, and for those people, the committee said, the extra payments could be as high as $682 a year.

In an interview recently, Medicare agency administrator Mehmet Oz said of Medicare Advantage insurers, “I don’t think they’re as overpaid as has been reported.” Yet, he said, the Medicare Advantage payment system had at times created the wrong incentives and “we should change the rules.”

ObamaCare is a train wreck. I wrote a book about it by the same name in 2014. Since then, it has only gotten worse. Costs continue to rise and the Democrats keep pushing more government subsidies to make it more affordable. This is throwing good money after bad. What can we do about it?

John C. Goodman, healthcare economist, has some suggestions. He says that Congress is making three missteps to fixing the problem:

• On the buyer side, we have been trying to force people to buy insurance they would never buy with their own money.
• On the seller side, we have been trying to force insurers to enroll people they do not want to enroll.
• On both sides of the market, we have created inverse incentives that cause costs to be higher and quality lower than would otherwise have been the case.

Goodman explains: “The difficulty of trying to force people to buy something they don’t want to buy became evident in year one. Fast food restaurant chains were forced to offer their employees insurance that was so comprehensive, we were led to believe it would cover the cost of a million-dollar premature baby. For self-coverage, employees had to pay 9.6 percent of wages, and out-of-pocket spending could be as high as $6,350. To cover a spouse and children, workers were asked to pay the full premium.”

The problem is people have no interest in coverage for low-probability medical events that could cost a million dollars. They figure they’ll never happen and if they do someone else will end up paying the bill.

Goodman tells us In the years that followed, Obamacare insurance became increasingly unattractive. Average premiums for marketplace plans have grown twice as fast as they have in a typical employer plan.  Last year, the average deductible in the most commonly selected exchange plan was $4,572, more than twice as high as in an average employer plan ($1,787). The maximum out-of-pocket expense in the average exchange plan was also more than twice as high ($9,450) as in the average employer plan ($4,750).

The current controversy concerns a second tier of federal tax subsidies for marketplace insurance. Although created during the COVID-19 era, the real reason for these enhanced subsidies was not COVID-19. The unsubsidized part of the market was in a death spiral. The healthy were dropping out in droves. As the pool became sicker, premiums kept rising to cover the higher cost.

What’s the solution?

Let people buy the insurance they want! KFF (formerly Kaiser) says that premiums could be cut in half for most people if they could buy the type of insurance that was generally available before there was Obamacare.

What if they choose a plan that fails to cover an unexpected problem (like substance abuse) that is required coverage in the Obamacare exchanges? Let them immediately switch to a silver exchange plan that meets that need. Keep Obamacare insurance in place for people who need it, when they need it. But let most families have cheaper and better insurance if it meets their current needs.

On the seller side, it should come as no surprise that insurers are not anxious to enroll people whose premium payments are well below the expected cost of their care. To solve this problem, look at the Medicare Advantage (MA) program. This is the only place in our health care system where doctors who discover a change in a patient’s condition (say the emergence of cancer) can send that information to the insurer (in this case, Medicare) and receive a higher premium payment to cover the expected increase in treatment costs. The result is MA plans welcome patients with costly health problems – patients that insurers in other market try to avoid.

Lastly, Goodman tells us there are perverse incentives in some plans. Because subsidized premium payments are capped as a percent of the enrollee’s income, most enrollees bear no personal cost when they choose a more expensive health plan. The extra cost is paid by the taxpayers. And since enrollees are not price sensitive, insurers don’t really compete on price.

To solve this problem, consider the federal employees’ health benefits program (the one Congress gets to use!) The employer subsidy is a fixed amount, independent of the employee’s health plan selection. If the employee chooses a more expensive plan, the extra cost comes out of the employee’s pocket, not some other pocket. Because this system makes buyers price sensitive, insurers in this market compete on price and quality just like they do in other insurance markets.

These solutions are not that difficult to implement, but Congress has a problem: Democrats won’t admit that ObamaCare has a problem – because they created it! Like an alcoholic who can’t get help until he admits he has a problem, Democrats won’t work with Republicans to fix ObamaCare until they face up to the failures of the healthcare system they created.

You might expect that medical students today are learning more than ever about medicine as time, research, and experience improve our understanding of human health. You might expect our medical schools would be producing the finest doctors ever with all this new knowledge. You would be wrong.

What’s wrong? Dr. Stanley Goldfarb, writing in The Wall Street Journal, says DEI is what’s wrong. Dr. Goldfarb is chairman of Do No Harm and a former associate dean at the University of Pennsylvania Perelman School of Medicine. He’s been an outspoken critic of woke medical education and his articles have been referred to before in this blog. (Woke Medical Education Update)

For those of you unfamiliar with DEI, it stands for Diversity, Equity, and Inclusion. Those are fancy terms for what amounts to reverse discrimination; a misguided attempt to undo past discrimination against people of color. Rather than heed the words of Dr. Martin Luther King, Jr. to judge people by the “content of their character, not the color of their skin,” DEI attempts to judge people only by the color of their skin, and white is always wrong.

How has DEI impacted medical education?

Dr Goldfarb explains, “For years, medical schools have emphasized discrimination and indoctrination at the expense of merit and excellence, to the detriment of patients. While the Trump administration has taken steps to right this wrong, a more far-reaching response is needed. For the sake of every American’s health, the president should reform the accreditation system for medical schools. The crisis in medical education is directly connected to DEI. For years, the Liaison Committee on Medical Education, which accredits M.D.-granting programs, required medical schools to establish programs “aimed at achieving diversity.”

Goldfarb goes on to tell us medical schools responded by embracing diversity in hiring and admissions. They changed their curricula to teach economic and social lessons that ladder up to the false claim that America is systemically racist. The LCME has tacitly approved this shift by issuing vague standards that give medical schools far too much leeway. The resulting lack of rigor allows unprepared students to slide through undemanding courses while undercutting the preparation needed to become excellent doctors.

The traditional medical school curriculum is comprised of two years of classroom study of all the subjects needed to complete a comprehensive medical education. The next two years are spent in clinical applications of those subjects while treating patients.

Goldfarb says the traditional two years of pre-clinical education required to become a doctor has been significantly reduced at more than a third of medical schools. This gives short shrift to the foundational curriculum in genetics, biochemistry, biostatistics and epidemiology. A senior associate dean at Rutgers told the American Medical Association in 2021, “It’s better, to me, to shorten the foundational science curriculum.” That leaves students with a diminished ability to understand medical literature and make health recommendations.

At UCLA’s David Geffen School of Medicine, according to reporting based on interviews with faculty members, more than 50% of students failed basic tests on family medicine, pediatrics and emergency medicine. Nationwide, the percentage of medical students who pass the first part of the licensure exam has fallen every year since 2020, dropping from 97% to 89% for students pursuing an M.D. Clinical skills have declined for years, made worse by DEI’s distraction from clinical education.

President Trump is addressing the problem. He signed an executive order calling out the LCME by name. The committee responded by formally abandoning its diversity mandate. Yet the LCME has kept a separate mandate that medical schools teach students to “recognize and appropriately address biases in themselves, in others, and in the health care delivery process.”

Unfortunately, this committee is sponsored by the American Medical Association and the Association of American Medical Colleges, both of which continue to champion DEI. (The AMA today represents only about one in four medical doctors. I personally dropped my AMA membership many years ago when I couldn’t tolerate their stance on abortion.)

The solution to the current problem is finding a new accreditor for medical schools. The Department of Education should be soliciting applications for a replacement, but this process will take time and the medical licensing exam and graduate medical education programs would also have to acknowledge the new accreditor.

I am proud to say as a Floridian that Florida and five other states are leading the way. They established the Commission for Public Higher Education to accredit their public university systems. They need to add a medical school accreditation component.

Dr Goldfarb says “Florida’s public medical schools are the best candidates for ditching the LCME. They’ve largely rejected DEI and embraced merit. That’s exactly what a new accreditor should do—for the benefit of physicians, patients and public health. Ultimately, this is about ensuring Americans have the best physicians providing the best care. DEI has distracted medical schools from their purpose, and while it’s vital to cure the ideological disease, it’s just as important to refocus medical education on its lifesaving mission.”