Expert: Cut Medicare overbilling to offset Obamacare rate hikes

(The Center Square) – Obamacare premiums are expected to rise about 30% next year, adding pressure on Congress as Democrats continue to block a Continuing Resolution to reopen the federal government over the issue.

Health policy experts say lawmakers could offset the increase by cutting $124 billion in Medicare Advantage overbilling by private insurers.

The Congressional Budget Office estimates that health insurers will overbill the federal government by $124 billion over the next decade through Medicare Advantage, the private insurance alternative to traditional Medicare, according to the agency.

The bipartisan NO UPCODE Act, sponsored by U.S. Sens. Bill Cassidy, R-Louisiana, and Jeff Merkley, D-Oregon, targets the practice of upcoding, where insurers exaggerate patient conditions to receive higher Medicare payments.

“The federal government pays insurers $1 trillion a year. If plans raise rates in Obamacare, let’s make them pay for it by ending their overbilling in Medicare,” Mark Merritt, a healthcare policy expert and former healthcare trade association CEO, said in a statement to The Center Square. “Congress can no longer ignore the nearly one-quarter trillion dollars it will pay private insurance companies next year to administer public health plans. It’s the only real pot of money there is.”

The legislation would use savings from ending overbilling to extend Affordable Care Act subsidies, which are set to expire Dec. 31 unless renewed by Congress, according to the bill summary.

The CBO estimates that half the savings could fund a two-year ACA subsidy extension costing $64 billion, with the rest going toward reducing the national debt.

Health insurers have seen record earnings from government programs in recent years.

In 2024, they received about $218 billion in ACA Medicaid expansion and exchange subsidies, driving industry profits to historic highs, according to the National Association of Insurance Commissioners. In 2025, leading health insurers are expected to generate close to $240 billion in revenue from Medicare, Medicaid, and ACA exchanges, according to HealthWorksAI.

Republicans say healthcare funding likely will be a key issue in talks on reopening the government and negotiating a fiscal year 2026 budget deal.

Insurers are expected to oppose efforts to reduce their payments. Once reliable Republican donors, major insurance companies have shifted toward Democrats. UnitedHealth Group directed nearly 59% of its political contributions to Democrats during the 2024 election cycle, according to campaign finance data.

With open enrollment beginning Nov. 1, Merritt said the policy debate will test both parties’ commitment to fiscal restraint.

“The policy of making insurers pay and requiring Democrats to back Medicare fraud reforms charts a path to affordable healthcare and fiscal responsibility,” Merritt said.