How US Health Insurers Got 2025 Numbers So Wrong
Every year, number crunchers at US health insurance companies look at their enrolled populations and calculate how many of them will break their arms, require a heart stent or be diagnosed with cancer. They use these figures to determine how much to charge in premiums to be able to cover patients' medical issues and still make a profit.
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Listen and subscribe to Decoding Retirement on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. In an exclusive interview on Yahoo Finance's Decoding Retirement podcast, Dr. Mehmet Oz, the administrator of the Centers for Medicare & Medicaid Services (CMS), discussed the financial and operational challenges facing the US healthcare system. Ultimately responsible for the healthcare of 66 million Medicare beneficiaries, 78 million people enrolled in Medicaid and the Children's Health Insurance Program (CHIP), and millions more in Affordable Care Act health plans, Oz weighed in on issues ranging from new Medicaid work requirements to Medicare Advantage fraud. This embedded content is not available in your region. Medicaid work requirements The Congressional Budget Office (CBO) estimates that the One Big Beautiful Bill Act (OBBBA) could reduce federal Medicaid spending by $793 billion over the next decade and lead to 10.9 million fewer enrollees by 2034. 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Medicare Advantage allows enrollees to receive Part A (hospital), Part B (medical), and, when bundled, Part D (prescription drug) coverage in one plan. The program has been under a harsh spotlight. Earlier this month, UnitedHealth confirmed it is under federal investigation. And a Wall Street Journal story detailed how some Medicare Advantage providers allegedly exploited the system through questionable or outright fraudulent billing practices. 'The whole point of launching Medicare Advantage was to give seniors options," Oz said. "But in the middle of all this, if it turns out that Medicare Advantage is costing us a lot more than fee-for-service, you're violating the whole premise.' The big problem is 'upcoding," the practice of inflating the severity of patients' conditions to trigger higher government payments. 'In Medicare Advantage, I do think that there's been an ability for the private companies to game the coding system,' Oz said. 'Instead of just saying, 'I got what I got, I'm going to take care of them and be honest about how sick they are,' they expertly devised tactics to upcode to pretend the patients were sicker than they really were. That got them more money.' Oz said CMS is now taking aggressive steps to recover funds and send a message: 'We have a process called RADV that allows us to go back to the late teens and, for the first time, audit Medicare Advantage companies,' he said. 'Based on what we find, we're going to pull money back from them. We expect it will be billions and billions of dollars. But more importantly, we're sending a message to the industry: Listen, I want you to succeed. I want you to thrive, but not at the expense of the American taxpayer.' Concern about Medicare's financial future According to the 2025 OASDI Trustees Report, Medicare Part B premiums are expected to rise 11.6% in 2026 to $206.50 a month — the steepest single-year increase in nearly a decade. At the same time, the Medicare Hospital Insurance Trust Fund, which finances Part A, is projected to run dry in 2033. If Congress doesn't intervene, that insolvency would trigger an automatic 11% cut in covered hospital services. Oz called the looming Part B increase a 'major concern,' citing the surge in prescription drug prices as the primary culprit. 'But there are other things,' Oz said, 'that are in Part B as well that we believe we have control over and we could get to be more efficient.' Rather than promising immediate regulatory fixes, Oz said his agency should work directly with industry. 'A lot of this is hearing the stakeholders and then pushing back on what you've heard and then letting them actually come up with some ideas themselves,' he said. 'We've gone back to all of them and said, we need better answers. What you're doing now is making you a lot of money, and you can do that for another year or two — and then the bottom's going to fall out.' 'The … Trustees Report predicts that [Part A] is bankrupt in 2033,' Oz added. 'That's three years shorter than we thought a month ago. And in their worst-case scenario, it goes bankrupt in [2029].' For context, Medicare Part A is primarily funded through a dedicated payroll tax under the Federal Insurance Contributions Act, or FICA. The total Medicare tax rate is 2.9% of wages — typically split evenly between employee and employer. That means 1.45% is withheld from your paycheck, and your employer contributes the other 1.45% on your behalf. Navigating Medicare open enrollment As Medicare's annual open enrollment period approaches — beginning Oct. 15 for 2026 coverage — millions of beneficiaries will face one of the biggest financial decisions of the year: whether to stick with their current plan or make a change. Most Medicare beneficiaries never switch plans, even though premiums, provider networks, and drug formularies can change from year to year. So how might retirees navigate this? 'We have to give people information,' Oz said. 'At the same point, I don't want people to panic and jump to changes." His advice is simple: Do your homework, but don't feel pressured to change plans unless you have a clear reason. One big resource is 1-800-MEDICARE. 'It's easy to remember, and it's got a ton of information,' he said. 'Especially during open enrollment, I strongly urge you to do a little work.' Hospice scams Healthcare scams are on the rise — and Medicare beneficiaries are among the top targets. The CMS recently sounded the alarm in a blog post and video featuring Oz, warning older Americans to be on guard for this disturbing trend. 'Beware of scammers, sometimes posing as salespeople, offering 'free' services or gifts,' the CMS blog warned. 'They may be trying to trick you into signing up for hospice care without your knowledge.' 'This is a reprehensible activity,' Oz said. 'It's run by criminal syndicates — not small-time operators. They take advantage of people at their most vulnerable time.' Hospice fraud is insidious because it targets people making some of the most difficult decisions of their lives. Oz said, 'We are hearing horror stories about people who thought they were entering legitimate hospice and there's nothing there for them. And even worse — because you're not really sick — people are on these hospice programs for years. We're going after them in a big way.' 'There is a new sheriff in town' Oz promised a tougher stance against healthcare fraud, both foreign and domestic. 'We already have actions in several states,' he said. 'The Department of Justice is pursuing a lot of these leads. We will leave no stone unturned. There is a new sheriff in town. I promise you, if you're cheating the American people, we will come after you. And if you're doing it to hurt folks who are most vulnerable — we'll be doubly vigilant.' Beyond enforcement, Oz emphasized that better technology and patient identification are key to preventing fraud before it happens. 'You're talking about an agency with a $1.7 trillion budget,' Oz said. 'One policy memo can affect [tens of millions of Americans.] We have to get it right.' One key will be distilling the complexity of the system into actionable information for both the public and his team. 'The goal is the same as it was" on his TV show, Oz said. "Explain it so people understand it and can act on it,' he said. 'If we simplify the rules, give people clear guidance, and enforce the protections already in place, we can change outcomes for millions of Americans." Got questions about retirement? Email Robert Powell at yfpodcast@ and we'll do our best to answer it in a future episode of Decoding Retirement. Each Tuesday, retirement expert and financial educator Robert Powell gives you the tools to plan for your future on Decoding Retirement. You can find more episodes on our video hub or watch on your preferred streaming service. Sign up for the Mind Your Money newsletter Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
