# Medicare Advantage **Medicare Advantage (Part C)** is the privatized arm of Medicare: instead of paying providers directly for services, the government pays a private insurer a risk-adjusted per-enrollee amount to administer a beneficiary's benefits. It now covers more than half of all Medicare beneficiaries — a majority reached quietly, without any statute ever deciding that Medicare should be privately run. ## How the payment works CMS pays each plan a monthly capitated rate per enrollee, adjusted upward for how sick the plan reports that enrollee to be. That risk adjustment is the whole game. Because revenue rises with recorded diagnoses rather than with delivered care, plans have a standing financial incentive to document more conditions — the practice known as [[Upcoding]] — and a matching incentive to deny or delay the services those diagnoses would imply, through [[Prior Authorization]] and narrow networks. Plans keep the difference. The result is a program that costs more than the thing it replaced. The [[Center for American Progress]] estimates Medicare Advantage costs the government roughly **$83 billion a year more** than traditional Medicare would cost to cover the same people. MedPAC has reached the same directional finding for years. Meanwhile [[UnitedHealth Group]], [[Humana]], [[CVS Health]], and [[Cigna]] have built enormous [[Vertical Integration]] structures around the program, owning the plans, the physician groups, and the [[Pharmacy Benefit Managers]] on all three sides of the same transaction. Overpayment and upcoding are recurring [[CMS]] and [[Department of Justice]] enforcement targets. ## The Project 2025 objective [[Project 2025]] does not propose abolishing Medicare. It proposes making Medicare Advantage the **default enrollment option** — so that a beneficiary who takes no action lands in a private plan rather than in traditional Medicare. Defaults are decisive in enrollment systems, which is why this is the most consequential Medicare proposal in the blueprint and the one that requires the least legislation. CAP's modeling of that proposal: raising Medicare Advantage penetration from roughly 51 percent to 75 percent could waste on the order of **$2 trillion over ten years** in excess payments, with no corresponding quality gain; even a partial shift would cost roughly $200 billion a year. In March 2026, STAT reported that CMS's Medicare director, Chris Klomp, said automatic enrollment in Medicare Advantage was under consideration — the blueprint's proposal surfacing as live administrative discussion. ## The Part D lever The mechanism does not have to be a rule change. Standalone Part D drug plans are the prescription-coverage option for people who stay in **traditional** Medicare; Medicare Advantage plans bundle drug coverage into the premium. So anything that raises standalone Part D premiums makes traditional Medicare more expensive relative to Part C, without touching Part C at all. That is the significance of [[CMS]]'s July 2026 decision to end the Part D Premium Stabilization Demonstration at the close of 2026 — see [[Medicare Part D]]. The 2027 national average monthly bid amount was set at $296.05, roughly 24 percent higher, and the subsidy that had been holding standalone premiums down disappears. Whatever the intent, the effect points enrollment toward Medicare Advantage, which is the outcome Project 2025 named as a goal. See [[Mehmet Oz - stabilizing the market]]. ## Why it matters here Medicare Advantage is the working model for how a popular universal program gets converted rather than repealed. The [[Social Security Act]]'s universality design made frontal assault politically fatal — the "third rail" — so the durable strategy has been to leave the program's name intact while relocating its administration, its money, and its gatekeeping into private hands one default at a time. Sixty years after the [[Medicare and Medicaid Act]], the majority of Medicare beneficiaries are already enrolled in a private plan. ## See also - [[Medicare Part D]] — the premium lever currently pushing enrollment this direction - [[Project 2025]] — the default-enrollment objective - [[CMS]] · [[Mehmet Oz]] — the agency and administrator implementing it - [[Upcoding]] · [[Prior Authorization]] · [[Managed Care]] — the operating mechanics - [[Vertical Integration]] — the corporate structure built around the program - [[Healthcare Industry Ecosystem]] — the hub analysis - [[Medicare and Medicaid Act]] · [[Economic Bill of Rights]] — what is being converted