House Democrats target Medicare Advantage with 47 cosponsors on new bill

More than 40 House Democrats led by Texas Representative Lloyd Doggett introduced legislation Wednesday that would cut payments to private Medicare Advantage plans, targeting what they call billions of dollars in annual overpayments to insurers including UnitedHealth Group Inc. and Humana Inc.

"The unjustified, costly advantage private Medicare Advantage insurers receive must be ended to save taxpayers and end the disadvantage for Traditional Medicare," Doggett said in a statement announcing the Save MEDICARE Act of 2026 (H.R. 9544).

The bill would exclude certain diagnosis codes identified as vulnerable to overcoding from payment calculations, prevent insurers from using diagnoses generated through chart reviews and health-risk assessments when calculating risk-adjusted payments, and accelerate Risk Adjustment Data Validation audits to recover improper payments. It would also require Medicare Advantage and Part D plans to reimburse the Department of Veterans Affairs for covered services provided to veterans and give states greater enforcement authority over Medicare Advantage requirements.

More than 67 million Americans are enrolled in Medicare, with private Medicare Advantage plans now covering roughly half of all beneficiaries — up from about 30 percent a decade ago. Lawmakers say excessive payments to Medicare Advantage insurers could cost taxpayers trillions of dollars over the coming decade if left unchecked.

The Overpayment Debate

The Congressional Budget Office has not yet scored the bill, but the Medicare Payment Advisory Commission has repeatedly found that Medicare Advantage plans cost the government more per beneficiary than traditional Medicare. In 2023, MedPAC estimated the government paid Medicare Advantage plans 104 percent of what it would have spent on comparable beneficiaries in traditional Medicare — a 4 percent premium that translates to billions annually.

Private insurers argue the comparison is misleading because Medicare Advantage plans provide additional benefits including dental, vision and hearing coverage that traditional Medicare does not. The industry has pushed back against what it calls "cuts to benefits seniors rely on."

The legislation faces a difficult path through a Republican-controlled Congress. Republicans have generally favored expanding private plan options rather than tightening oversight, though some have expressed concern about Medicare's long-term solvency. The Medicare trust fund is projected to become insolvent by the early 2030s.

What It Means for Beneficiaries

The immediate effect on seniors would likely be indirect. Reducing overpayments could strengthen Medicare's finances, potentially leading to better benefits or lower out-of-pocket costs in traditional Medicare over time.

"For beneficiaries, the bill would not immediately take away Medicare Advantage plans, but it could reduce insurer profits and potentially redirect savings toward stronger traditional Medicare benefits," said Alex Beene, a financial literacy instructor at the University of Tennessee at Martin.

For the roughly 33 million Americans enrolled in Medicare Advantage plans, insurers could respond to lower federal payments by reducing supplemental benefits or adjusting premiums. Kevin Thompson, CEO of 9i Capital Group, said the bill could "lower costs within Medicare Advantage, better align outcomes with traditional Medicare, and potentially help the overall Medicare system remain solvent longer term."

The bill has been referred to the House Ways and Means Committee. No hearings have been scheduled.

This article is for informational purposes only and does not constitute investment advice.