Medicare Advantage, originally designed to save taxpayer money, is now using billions in government funds to provide seniors with perks like pet food, golf fees, and ski passes while costing taxpayers an additional trillion dollars over the next decade.
At a Glance
- Medicare Advantage plans now offer non-medical perks including golf equipment, ski passes, and pet supplies using taxpayer dollars
- The program is projected to cost taxpayers an additional $1 trillion over the next decade due to overpayments
- The Bipartisan Budget Act of 2018 expanded benefits beyond health-related services to include lifestyle perks
- In 2024, 10 million Medicare beneficiaries will receive non-medical “supplemental benefits” with 48% of plans offering “flex cards” averaging $966
- Both Republicans and Democrats have proposed cutting overpayments to reduce government spending
From Cost-Saving Program to Taxpayer Burden
Medicare Advantage was originally created as a market-based alternative to traditional Medicare, designed to leverage private sector efficiency to reduce healthcare costs. However, the program has evolved into something far different than intended. Today, Medicare Advantage plans receive significantly more funding than traditional Medicare, with payments rising from 112% to 120% of estimated costs between 2015 and 2024. The Congressional Budget Office severely underestimated the cost impact of expanded benefits, as eligibility criteria and payment structures have expanded dramatically.
These overpayments have ballooned from $18 billion to $77 billion annually, with supplemental benefits increasing from $960 to $2,520 per beneficiary. According to the Committee for a Responsible Federal Budget, these excess payments will cost American taxpayers approximately $1.2 trillion over the next decade if left unchecked. This represents a significant departure from the program’s original cost-saving mission and places additional strain on already stressed government finances.
Golf Fees, Ski Passes, and Pet Food: The New Medicare “Benefits”
The transformation of Medicare Advantage began with the Bipartisan Budget Act of 2018, which significantly expanded what could be classified as a “health benefit.” Prior to this legislation, supplemental benefits were strictly limited to services directly related to health care. Now, plans can offer an astonishing array of non-medical perks, particularly to beneficiaries classified as having chronic conditions—a designation that covers the majority of Medicare recipients.
These expanded benefits now include expenses that would surprise most taxpayers: golf course fees, “ski passes at resorts around the country,” hunting licenses, beauty services, social club memberships, and even pet care. Humana, one of the largest Medicare Advantage providers, advertises coverage for “pet food, pet toys, kitty litter and flea shampoo” as part of their benefits package. In 2024 alone, approximately 10 million Medicare beneficiaries will receive such non-medical “supplemental benefits.”
Strategic Enrollment Targeting
Insurance companies administering Medicare Advantage have strong financial incentives to attract healthier seniors while avoiding those with serious health conditions. By offering attractive lifestyle perks like fitness memberships, golf benefits, and social activities, plans can target active, healthier seniors who are less likely to require extensive medical care. This selection bias contributes significantly to the overpayment problem, as plans receive standardized payments but serve healthier-than-average populations.
The Special Supplemental Benefits for the Chronically Ill (SSBCI) program has seen rapid expansion, with eligibility criteria becoming increasingly inclusive. Many Medicare Advantage plans now offer “flex cards” that provide cash-equivalent benefits averaging $966 per beneficiary. These cards can be used for a wide range of non-medical expenses, further distancing the program from its healthcare roots while driving up costs to taxpayers and increasing insurer profits.
Bipartisan Support for Reform
Concern about Medicare Advantage overpayments crosses political lines. Both Republicans and Democrats have proposed solutions that would redirect the excessive spending. Senator Elizabeth Warren has suggested using savings from reduced overpayments to expand other social welfare programs, while conservative voices have advocated for capturing these savings to reduce deficits and ease the burden on working taxpayers who ultimately fund these benefits through their tax dollars.
The debate highlights a rare area of potential bipartisan agreement: Medicare Advantage requires significant reform to return to its original purpose of providing cost-effective healthcare. Whether the savings should be used for deficit reduction, tax relief, or other programs remains a point of contention, but the recognition that the current system represents poor stewardship of taxpayer funds is increasingly shared across the political spectrum.
As Medicare’s financial challenges grow more acute with an aging population, addressing the estimated $1.2 trillion in overpayments over the next decade represents an important opportunity to strengthen the program’s long-term viability while ensuring taxpayer dollars are used responsibly for necessary medical care rather than lifestyle enhancements and pet supplies.
