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January 18, 2023
David Burda
Economics Policy System Dynamics

Keep Moving. Nothing to See Here. Just Another Double-Digit Increase in Medicare Advantage Spending

I’m starting to run out of clever headlines to tell the same story. Spending on Medicare Advantage plans rose by double digits again in 2021, according to the latest National Health Expenditure data released by CMS in December, and no one seems that interested or willing to do anything about it.

Federal outlays for MA plans rose 14.1 percent in 2021 to about $416.9 billion. That follows:

  • A 15.6 percent increase in 2020 (revised downward by CMS from 17.1 percent)
  • A 15.2 percent increase in 2019 (revised downward by CMS from 15.3 percent)
  • A 12.6 percent increase in 2018
  • A 10.1 percent increase in 2017

By comparison, total Medicare spending in 2021 rose 8.4 percent to about $900.8 billion, according to CMS. Total national health spending rose just 2.7 percent to $4.3 trillion.

So, using my rudimentary math skills, MA spending rose nearly twice as fast as all Medicare spending in 2021 and more than five times faster than total healthcare spending. In 2021, MA spending ate up 46.3 percent of all Medicare spending, up from 43.9 percent in 2020.

At what point does runaway MA spending trip the unsustainable alarm, and lawmakers, policymakers and regulators do something drastic to stop it?

I realize that there are lots of audits, lawsuits, reports and recommendations going around. But as CMS’ numbers clearly show, none have had much of an effect. Nothing seems to stop private health plans and providers who are getting into the MA game from exploiting a government program for profit.

Ultimately, the whole thing will come crashing down, and the ones who will get hurt will be seniors who enrolled in an MA plan. Payers and providers will just move on to another government honey hole.

That’s not a headline I want to write. But I will if I have to.

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Thanks for reading.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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