Going Up

From time to time, we have noted the growth of Medicare Advantage plans that now cover more than half of the Medicare population in the US. As blog readers will know, at one point UCOP contemplated shifting the entire retiree health insurance population at UC into such a plan. After a protest, Medicare Advantage instead became a lower-cost option for retirees. Many experts have suggested that the growth in Medicare Advantage plans and there seeming cheapness was due in part to overpayment from the feds. Congress was aware of this issue, but seemed uninterested in doing anything about it. 

That indifference may now shift. Republicans in Congress keep talking about replacing "Obamacare," but can't seem to produce an alternative. With subsidies for such plans expiring, there is now more focus on the problem of rising health insurance costs. The irony is that if the overpayment by the feds is checked, the cost to consumers of Medicare Advantage plans is likely to rise. UC's Medicare Advantage offerings - because they are group - have somewhat different regulations than individual plans. But the logic is the same: if the overpayment is reduced, premiums will rise.

From the NY Times ...The growth of Medicare Advantage plans — which now account for more than half of total enrollment — plays a role as well. These privately offered alternatives to government-run traditional Medicare often reduce upfront costs by including prescription drug coverage. They also include out-of-pocket caps ($5,320 this year) without the Medigap policies that provide that protection in traditional Medicare. That comes with trade-offs, including health care provider networks and frequent red-tape hassles with coverage approvals, known as prior authorizations.

Medicare spends about $80 billion more annually for Medicare Advantage enrollees than it would if they were enrolled in traditional Medicare, leading to higher spending for both Part A (which covers hospitalization) and Part B.

The higher spending contributes to higher Part B premiums that are paid by beneficiaries in both traditional Medicare and Medicare Advantage...

Full story at https://www.nytimes.com/2025/11/22/business/medicare-part-b-premium-2026.html.

We have also noted on this blog that UCLA created its own Medicare Advantage plan for residents of LA County (but not UC retirees eligible for UC retiree health insurance!). It, too, could be affected.