Medicare Advantage Is a Warning Sign

Originally published on Substack. 

America’s seniors are being told two very different stories about Medicare Advantage.

On one side, they hear that private plans offer extra benefits and care coordination.

On the other, they are learning that alleged overpayments may have already cost seniors billions in higher premiums, as detailed in a recent report highlighted by the Wall Street Journal.

At the same time, many seniors unhappy with their current coverage are being reminded that the Medicare Advantage open enrollment window closes March 31. And a growing debate over upcoding and overpayments is forcing policymakers to confront how this program is actually financed.

That is a much more newsworthy hook than the latest CMS percentage change, but the deeper point is bigger than one program. Medicare Advantage is not the disease. It is the warning sign.

The disease is a healthcare financing system built around government formulas, insurer incentives, and bureaucracy rather than patients and doctors.

Why the latest Medicare Advantage fight matters

The latest 2027 Medicare Advantage advance rate notice from CMS proposes what looks like a tiny average payment increase. But as the detailed breakdown makes clear, that headline number hides several moving parts involving benchmarks, quality adjustments, and risk-adjustment changes.

The annual rulemaking cycle has become its own policy ritual, with insurers, consultants, budget hawks, and advocates all fighting over formulas that most seniors never see. That alone should tell policymakers something is off.

If the system works only after endless payment calibrations, coding adjustments, and annual political fights, then the system is not patient-centered. It is bureaucracy-centered.

Why Medicare Advantage keeps growing

Medicare Advantage has grown because many seniors like the additional benefits and managed-care structure.

The basic fact sheet explains that these plans bundle Medicare Parts A and B and often Part D, sometimes with extras such as vision, dental, or wellness benefits.

But popularity is not the same thing as sustainability.

The federal government pays Medicare Advantage plans a per-person amount, adjusted for factors such as geography, quality scores, and health status. That basic financing structure is described in this explanation of how Medicare Advantage is paid.

The trouble is that once government sets the formula, the system naturally rewards gaming the formula.

That is where upcoding comes in. If plans can document more diagnoses, they can often receive higher reimbursements. Even defenders of the program increasingly admit this is a serious issue. And when overpayments rise, seniors do not just pay indirectly as taxpayers.

They can also pay directly through higher Medicare premiums, which is exactly why the latest reporting has landed so hard.

This is a financing problem, not just a Medicare Advantage problem

The temptation in Washington is to treat every healthcare problem like a payment problem. Raise this rate. Cut that formula. Tighten this coding rule. Expand that pilot program.

That approach misses the real issue.

The problem is that patients still do not control enough of their own healthcare dollars. Government and insurers do.

As long as healthcare is financed through federal formulas and third-party payment systems, politics will dominate medicine. Patients become passive recipients. Doctors become compliance managers. Insurers become expert navigators of government incentives.

That is not a recipe for affordability. It is a recipe for endless churn.

The Empower Patients answer

This is why my co-authored work on Empower Patients pushes a different direction.

We need to move power away from Washington and back to patients.

That starts with what we call the Transfer, shifting the value of the employer health insurance tax exclusion directly to workers so they can control those dollars themselves.

It includes no-limit HSAs, so people can save and spend on healthcare tax-free without artificial caps.

And it means moving Medicaid toward state-driven flexibility rather than one-size-fits-all federal micromanagement.

The point is simple: if patients control more of the money, the system starts working for them instead of around them.

That is also the logic behind broader reform ideas focused on Medicare sustainability. You do not fix a structurally unsustainable program with another round of annual adjustments. You fix it by changing the incentives.

What policymakers should take from this

The latest Medicare Advantage headlines should not push lawmakers toward more central control. They should push them toward structural reform.

If plans are overpaid, fix the incentives. If seniors are trapped in confusing coverage choices, simplify the system. If annual payment battles keep dominating healthcare policy, stop pretending the bureaucracy is the answer.

The lesson from Medicare Advantage is not that private plans are bad or government plans are pure. The lesson is that third-party payment and government-designed incentives distort everything they touch.

The bottom line

Medicare Advantage is exposing the deeper flaw in American healthcare.

Washington keeps trying to fine-tune a system that is fundamentally built backwards. The result is higher costs, more complexity, and seniors caught in the middle.

The answer is not another technocratic patch.

The answer is to empower patients, let doctors practice medicine, and let healthcare dollars follow people instead of bureaucracies.

That is how you get affordability. That is how you get accountability. And that is how you let people prosper.

For policymakers

1. Treat Medicare Advantage overpayments as a symptom of broken incentives, not a one-off scandal.
2. Stop relying on annual payment rulemakings as a substitute for structural reform.
3. Shift healthcare financing toward patient control through the Empower Patients framework.
4. Expand room for no-limit HSAs and portable healthcare dollars.
5. Focus on sustainability by changing incentives, not by adding more bureaucracy.

Call to action

If you are a policymaker, staffer, journalist, or healthcare leader, this fight over Medicare Advantage should be a signal that the financing model itself needs reform.

For interviews, speaking requests, or deeper discussion of Empower Patients and broader healthcare reform, reach out and let’s talk.

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