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$76 billion in 2026: What Medicare overpays private insurance plans
Medicare's own advisers say it will pay about $76 billion more this year for people in private Medicare Advantage plans than it would in traditional Medicare.
Medicare Advantage
- Extra paid for Medicare Advantage enrollees, 2026≈$76B (14% more)1
- Projected overpayments, 2027–2036$1.3 trillion2
- From coding patients as sickerRisk scores ≈4% higher1
- From enrolling healthier people≈11% higher payments1
- Medicare Advantage paid in error, FY2025$23.67B4
- Largest Medicare Advantage fraud settlement$556M, Kaiser, Jan 20263
- Diagnoses the government says were added≈500,000 (2009–2018)3
- How much of the $76B is fraud████████████████
What happened
Private Medicare Advantage plans get paid more for sicker patients, based on the diagnoses the plans report. MedPAC, Congress's Medicare advisers, estimates Medicare will spend about 14 percent more on these enrollees in 2026, roughly $76 billion.
In January 2026, Kaiser Permanente affiliates agreed to pay $556 million to settle allegations that they pressured doctors to add diagnoses patients didn't have. The complaint alleged about half a million added diagnoses and about $1 billion in improper payments.
Projected forward with the Congressional Budget Office's baseline, those overpayments come to about $1.3 trillion from 2027 through 2036: roughly $520 billion from coding and $760 billion from favorable selection, by the Committee for a Responsible Federal Budget's count.
Why nobody caught it
- The diagnoses that set the payment come from the plans themselves.
- Most of Medicare Advantage's $23.67 billion in improper payments in fiscal 2025 came from records that didn't back up the diagnoses the plans reported.
How sure are we?
Money was paid to settle the government's claims, without an admission of wrongdoing.
MedPAC's $76 billion is an overpayment estimate, and some of it is legal under current rules. Kaiser did not admit wrongdoing.
Sources
- March 2026 report to the Congress: Medicare payment policy (press release)Medicare Payment Advisory Commission · Mar 2026
- New data suggests Medicare Advantage overpayments of $1.3 trillion over the next decadeCommittee for a Responsible Federal Budget · Jan 23, 2026 (updated Mar 5, 2026)
- Kaiser Permanente to pay $556 million in record Medicare Advantage fraud settlementKFF Health News · Jan 15, 2026
- Fiscal year 2025 improper payments fact sheetCenters for Medicare & Medicaid Services · Jan 15, 2026
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