Congress Reveals a Huge Problem Leading to Higher Medicare Premiums

By Christy Bieber – Apr 11, 2026 at 4:35AM ESTKey PointsMedicare premiums are expected to increase dramatically in the coming years. A report from Congress recently revealed one of the biggest problems leading to rising premiums. Medicare Advantage being overpaid could cost seniors billions of dollars. Medicare premiums have become a huge financial worry for many seniors as premiums are increasing rapidly, affecting retirees' budgets. In 2026, alone, monthly premiums for Medicare Part B rose $17.90, jumping to $202.90 from the $185 seniors paid in 2025. Things are only going to get worse, too -- at least according to a Joint Economic Committee issue brief prepared for the United States Congress. The brief highlights a major problem that will have serious consequences for Medicare recipients. Image source: Getty Images. Congressional report reveals major Medicare problem that's costing retirees According to a March 2026 report prepared by the Joint Economic Committee (a bicameral committee of the U.S. Congress), Medicare costs have been rapidly on the rise, and will continue to increase sharply upward, for a simple yet surprising reason: Medicare Advantage is overpaid. Medicare Advantage is an alternative to traditional Medicare that combines Part A (hospital coverage) with Part B (outpatient care coverage). Medicare Advantage was supposed to be cheaper than traditional Medicare because the plans were intended to incorporate the efficiencies of private sector managed care. Medicare Advantage plans now cover around 55% of Medicare enrollees, but instead of saving money, costs have increased dramatically. In 2025, payments to Medicare Advantage totaled around $84 billion more than the amount it would have cost to provide the same benefits via traditional Medicare. That's 120% of the costs of traditional coverage. Unfortunately, Medicare's financing structure is designed to pass on around 26% to 28% of increases in expenditures to beneficiaries in the form of higher premiums.

Since Medicare Advantage plans now cost the government so much, passing even this small portion of costs onto Medicare recipients is causing huge cost increases -- and things are likely to get worse. How much higher are Medicare premiums due to expensive Advantage plans? So, how much higher have Medicare premiums climbed because of the added costs of Advantage plans being passed on?

The Joint Economic Committee report indicates that overpayments to Advantage Plans increased Part B premiums by $212 per enrollee in 2025. That's $14.3 billion more in premium costs that plan participants have to cover. And when you go back a little further, the numbers become even more staggering. Since 2016, for example, Medicare Advantage overpayments have added a shocking $82 billion to Medicare Part B premiums. Since the funding formula results in these costs being shared with traditional Medicare beneficiaries, it's not just those on Advantage plans who are paying the price for this expensive coverage. If trends continue, the Joint Economic Committee warns Medicare premiums are going to approximately double by 2035, rising from around $2,440 to around $5,000. This is a huge burden for seniors to cope with. Younger workers who still have time to make retirement plans should be prepared for the fact that they'll need a lot more money than they might imagine to cover their Medicare costs -- unless something changes. Investing wisely to build up a generous nest egg can help older Americans to ensure that they'll be able to pay for Medicare premiums even if this Medicare Advantage problem isn't solved. Those who aren't yet retired should focus on making sure they contribute enough to their 401(k) or IRA and that they are making the smartest investment decisions possible.Read NextApr 11, 2026 •By Marc GubertiCan You Still Contribute to an IRA If You're Already Retired? What to Know Before April 15Apr 11, 2026 •By Christy BieberCould We Be Looking at a Worst-Case Scenario for the Social Security COLA?Apr 11, 2026 •By Maurie BackmanHere's Why the New $6,000 Senior Tax Deduction Does Some Retirees No GoodApr 10, 2026 •By Katie BrockmanShould You Really Start Taking Social Security in 2026? Here's What the Data SaysApr 10, 2026 •By Kailey Hagen, CFPAre You Getting the Most Out of Your Social Security Benefit in 2026?Apr 10, 2026 •By Maurie BackmanFiling for Social Security at 62 Could Cost You Far More Than You Think -- Even If It Seems Tempting NowAbout the AuthorChristy Bieber is a contributing Motley Fool retirement and Social Security expert covering retirement planning, 401(k)s, IRAs, and other personal finance topics. Christy has written about finance since 2008 and previously taught business courses at Bryant & Stratton College. She holds a law degree from UCLA and a bachelor’s degree in English, media, and communication with a certificate in business management from the University of Rochester. In law school, she earned three CALI Awards for Excellence for the highest scores in civil procedure and contract law exams.TMFChristyB