Goodsurance
ES

Costs & IRMAA

Medicare Spent 76 Billion Dollars More on Advantage Enrollees Than It Would Have in Original Medicare

A KFF analysis of the 2026 Medicare Trustees Report finds that overpayments to Medicare Advantage plans cost the program an estimated 76 billion dollars in 2026, while Part D drug spending is on track to nearly double by 2035 driven by GLP-1 drugs and high-cost specialty medicines.

By the Goodsurance editorial teamJuly 7, 2026

Medicare paid an estimated 76 billion dollars more for Medicare Advantage enrollees in 2026 than it would have if the same people had remained in original fee-for-service Medicare, according to a KFF analysis of the 2026 Medicare Trustees Report published June 24, 2026. The excess reflects a 14 percent per-enrollee payment premium that the Trustees attribute largely to higher coding intensity and favorable selection, meaning Medicare Advantage plans tend to attract enrollees who are healthier than average but are coded as having higher health needs.

On the prescription drug side, the Trustees project Part D spending will nearly double, rising from 181 billion dollars in 2025 to an estimated 346 billion dollars by 2035, an average annual increase of 6.7 percent. That is faster than the 4.8 percent annual growth the Trustees projected a year earlier for a comparable period.

Medicare paid 76 billion dollars extra in 2026 because of how it pays Advantage plans. Drug spending is projected to nearly double by 2035.

Three factors are driving the steeper Part D trajectory: rising use of GLP-1 drugs for obesity and diabetes alongside other high-cost specialty medicines; the pharmacy price concessions policy, which lowers patients' out-of-pocket costs at the pharmacy counter but reduces rebate revenue to plans and increases the federal share of drug expenses; and a 2025 budget reconciliation provision that exempted more orphan drugs from the Medicare drug price negotiation program. A separate KFF analysis found Part D spent 27.5 billion dollars on GLP-1 drugs in 2024 before rebates, about five times the 2019 amount. GLP-1 prescriptions grew from 4.8 million in 2019 to 21.8 million in 2024. A negotiated Medicare price for semaglutide, sold as Ozempic and Wegovy, takes effect in 2027.

The Part A Hospital Insurance trust fund depletion date remains projected for the second quarter of 2033, unchanged from the prior year's estimate. Together, these findings reflect a Medicare program facing growing financial pressure from both its managed care payment structure and an accelerating drug cost trajectory.

In plain words

A government report studied by health researchers found that Medicare paid 76 billion dollars more in 2026 because of how Medicare Advantage plans are paid. These plans get more money per person than regular Medicare would cost for the same person. On top of that, the cost of Medicare drug coverage is expected to nearly double by 2035. The main reasons are expensive new medicines like GLP-1 drugs for weight loss and diabetes, and some law changes that limit how many drugs can have their prices negotiated. The fund that pays for hospital care is still expected to run low in 2033 if Congress does not act.

Understand the basics first

Source: KFF
Read at the source →

More news

Other stories on what is moving in Medicare.

Costs & IRMAA

Medicare Will Pay 20 Percent Less for the Cheaper Service When a Doctor Bills Both a Visit and a Procedure on the Same Day Starting in 2027

A provision in the final 2027 physician pay rule, published today in the Federal Register, trims reimbursement when a physician furnishes an office visit and a minor procedure on the same date. CMS projects the change will prevent approximately 2.38 billion dollars in extra Medicare payments over the next 10 years.

November 9, 2026

Costs & IRMAA

Medicare Finalizes 2027 Outpatient Rule, Cutting Drug Costs for Patients at Hospital Clinics

CMS issued a final rule November 4 that sets a 2.3 percent hospital outpatient payment increase for 2027 and lowers what Medicare pays hospitals for 340B-acquired drugs, projecting average savings of about 900 dollars for beneficiaries who receive a qualifying drug at a hospital outpatient department.

November 5, 2026

Costs & IRMAA

Nearly All Medicare Stand-Alone Drug Plan Members Will Face a Deductible in 2027, With Averages Up Sharply

A KFF analysis of 2027 Part D plan designs finds average deductibles rising to 643 dollars for stand-alone plan enrollees and 489 dollars for Medicare Advantage drug plan members, while the share of enrollees subject to any deductible expanded in both plan types.

October 30, 2026

Costs & IRMAA

CMS Finalizes 2027 Medicare Dialysis Payment Rate at 297 Dollars and 52 Cents, With a Larger Add-On for Home Dialysis Training

A final rule issued October 28 sets the per-treatment base rate for kidney dialysis facilities and raises the payment designed to encourage training patients to do dialysis at home.

October 29, 2026

Costs & IRMAA

Medicare's Hospital Fund Is Projected to Fall Short of Full Payment Capacity by 2033, Trustees Report Finds

The 2026 Medicare Trustees Report projects the Part A Hospital Insurance fund will be partially depleted in 2033, at which point incoming revenues would cover only 89 percent of covered costs, absent new legislation.

October 26, 2026

Costs & IRMAA

KFF: Nearly Half of Traditional Medicare Beneficiaries Hold Medigap, as Average Monthly Premiums Reach 244 Dollars

A KFF analysis released two days before open enrollment finds 12.9 million people carry supplemental Medigap policies, that average premiums rose 7 percent in a single year, and that Plan G now covers nearly half of all policyholders.

October 15, 2026