Republicans Must Protect Medicare Advantage from Abuse
Republicans have long championed Medicare Advantage as a market-based, fiscally responsible alternative to traditional Medicare.
For good reason.
It gives seniors more choices, encourages competition, and often delivers better results at lower cost.
But if conservatives want to preserve Medicare Advantage, they must confront an uncomfortable truth: parts of the program are being abused by powerful insurers — and that abuse threatens to undermine everything that makes Medicare Advantage worth defending.
Federal authorities recently opened a criminal investigation into UnitedHealth Group (UHG), which owns the nation's largest insurer.
The Department of Justice is investigating whether the firm engaged in fraudulent billing practices through its Medicare Advantage plans, which cover approximately 9.4 million Americans.
The company allegedly exaggerated patients’ diagnoses by "upcoding," a tactic that makes a patient’s condition appear more severe in order to receive higher payments from Medicare.
But that’s not the only reason the company deserves scrutiny from the Trump administration.
UHG has also indirectly been fighting against Republicans' healthcare reform efforts for years by quietly funding AARP, the powerful Democrat-aligned lobbying and advocacy group that supposedly fights for seniors, but in reality, protects the interests of its main funder.
Shining a light on this potential fraud — and known double-dealing — would help ensure that Medicare Advantage works better for both seniors and taxpayers.
The concept behind Medicare Advantage is sound. Traditional Medicare reimburses doctors, hospitals, and other providers for the services they deliver — regardless of whether those services are necessary or improve patients' health.
This "fee-for-service" payment model distorts doctors' and hospitals' incentives, encouraging them to provide more tests, operations, and prescriptions than are truly necessary.
The more services they deliver, the more they earn.
Medicare Advantage, by contrast, seeks to harness the power of market competition. Insurers design a variety of plans with varying deductibles, premiums, and levels of coverage.
That gives seniors the option to choose a plan that best suits their budget and health needs. Some of the plans are comparatively bare-bones, while others are gold-plated and include additional coverage for dental, vision, and hearing benefits that traditional Medicare doesn't cover.
The federal government regulates Medicare Advantage plans and heavily subsidizes the premiums. But Medicare Advantage is significantly more market-friendly than most other government programs.
Insurers can maximize their own profits by steering seniors toward the most cost-effective care, which, of course, benefits seniors and taxpayers as well.
Many studies have shown that Medicare Advantage leads to both improved health outcomes and lower spending.
A paper published in JAMA Health Forum concluded, "Medicare Advantage was associated with reductions in hospital use and spending."
A literature review examining over 60 recent studies found that "Medicare Advantage outperformed traditional Medicare on some measures, such as use of preventive services, having a usual source of care, and lower hospital readmission rates."
But like any program, Medicare Advantage can be abused. And there's considerable evidence that suggests UnitedHealth Group has violated the spirit, and possibly the letter, of the law.
One whistleblower revealed in 2017 that UHG pressures its affiliated providers to tack on additional diagnoses — including by offering software to facilitate the process and financially rewarding physicians for playing ball.
This "upcoding" effectively defrauds taxpayers.
One study found that UHG received about 42% of all overpayments to Medicare Advantage plans in 2021, or almost $14 billion. The inspector general more recently found that UHG continues to clear billions of dollars in overpayments.
UHG and other insurers also increasingly offer Medicare Advantage plans with flex benefits that include greens fees at golf courses, ski passes, pet food, and even hunting licenses. These benefits lead to higher premiums, which are, in turn, federally subsidized.
UHG's political machine obviously doesn't want to shake up the status quo. And that's where AARP comes in.
The supposed senior advocacy group actually earns roughly $700 million annually in royalty payments from UnitedHealth Group, which sells AARP-branded Medicare Advantage plans.
Royalties now account for the majority of AARP's operating revenue, far exceeding dues from its senior members.
It's no surprise, then, that AARP often acts like UnitedHealth’s lobbying arm in Washington. It's fought efforts to rein in wasteful Medicare Advantage practices and overwhelmingly supports Democratic candidates.
In the last cycle, 96% of AARP employees’ campaign donations went to Democrats.
Republicans can’t afford to ignore this. Medicare Advantage works — but only if it's grounded in real competition, not rigged subsidies and political protection rackets.
Fixing the problem doesn’t mean scrapping the program. It means restoring integrity. That includes rooting out fraudulent billing, eliminating frivolous "flex" benefits, and requiring more transparency from groups like AARP.
Conservatives are right to back Medicare Advantage. But they must also be the ones to clean it up — before Democrats use the abuses as a pretext to destroy it altogether.
Drew Johnson is a budget policy analyst and government watchdog who was the Trump-endorsed Republican nominee for Congress in Nevada’s 3rd Congressional District in 2024. Read More of His Reports — Here.
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