Medicare was created in 1965 as a public insurance program for Americans over 65 and people with qualifying disabilities. Since the 1980s a growing share of Medicare has been administered by private insurers under contracts with the federal government — first as Medicare+Choice, now as Medicare Advantage. Today nearly half of all Medicare enrollees are in a private plan.
The federal government pays private insurers a premium to administer Medicare Advantage. The documented mechanism by which those insurers extract profit from that premium — upcoding patient diagnoses to make enrollees appear sicker than they are, triggering higher payments — transferred $84 billion in a single year from taxpayers to shareholders. UnitedHealth Group faces an active Department of Justice criminal case. Kaiser Permanente settled a civil case for $556 million. The seniors enrolled in these plans frequently did not understand they were leaving traditional Medicare and in many cases cannot easily return.
This is not a story about insurance complexity. It is a story about the systematic extraction of public funds through a privatization experiment that has cost taxpayers more than traditional Medicare while delivering documented fraud at scale.
This hub documents how Medicare Advantage works, how the overbilling mechanism operates, who benefits from the current structure, and what the serious reform proposals involve. It does not advocate for a specific policy path. It provides the documented record that informed deliberation requires.