Seniors and Kids as Profit Centers: Medicare Advantage and School Vouchers Exploit Both
“[T]he creation of a permanent, uncapped 1-for-1 tax credit for vouchers for wealthy students, most of whom are already attending private and religious schools, is a tremendous waste of billions of dollars. It’s the centerpiece of the Great American Heist — a privatization scheme wrapped in tax policy.”
– Denise Forte, President & CEO, EdTrust, written testimony before the Senate Democratic Caucus K-12 Education Spotlight Forum, July 24, 2025
On the evening of April 6, 2026, just minutes after the New York Stock Exchange closed, the Trump Administration handed the private health insurance industry an additional gift worth $13 billion – far more than the $700 million increase it had proposed in January – bringing total Medicare Advantage (MA) payment growth for 2027 to approximately $26 billion when accounting for risk score trends.
According to a Senate Joint Economic Committee (JEC) report released in March, these additions come on top of historical overpayments to MA plans that have been made for years. JEC reports:
Medicare Advantage costs “an estimated 120 percent of what it would cost in Traditional Medicare (TM)….” Therefore, to receive more restricted provider networks and prior authorization requirements, Medicare beneficiaries and taxpayers are paying an extra 20% than what Medicare typically pays.
Medicare Advantage overpayments increased Medicare Part B premiums “by $212 per enrollee in 2025, totaling $13.4 billion in higher premiums.”
“Since 2016, Medicare Advantage overpayments have added an estimated $82 billion to Part B premiums. Even traditional Medicare beneficiaries, who are not enrolled in MA, bore roughly $6 billion of that burden.”
The traditional and Medicare Advantage enrollees pay for about 85% of the added premium costs, while the remainder falls upon federal (9%) and state (6%) taxpayers.
The Administration knew all of this before deciding to grant MA plans the additional $13 billion. According to Wendell Potter, the Centers for Medicare and Medicaid Services (CMS) had to wait until after the 4 p.m. close of the stock market on April 6th because the agency knew the announcement would be “material to earnings” for Big Insurance.
That was the case. CNBC reported, that, within minutes of after-hours trading, the share prices of UnitedHealth Group, Humana, and CVS/Aetna each surged.
Potter adds that one hedge fund manager who reportedly holds 3.4 million shares of UnitedHealth stock alone may have made more than $76 million in the time it takes to watch a television ad urging seniors to “protect your Medicare benefits.”
Medicare Advantage was created in 1997 with the express purpose of enabling private health plans to use mechanisms such as restrictive provider networks and insurance practices, including prior authorization requirements, to reduce Medicare costs. Nearly 30 years later, it never has.
One reason is the intense lobbying done by private insurance who benefit from these excessive payments. A bipartisan group of senators, including Sens. Jeff Bingaman (D-NM), Olympia Snowe (R-ME), Bob Graham (D-FL), and Dave Durenberger (R-MN) argued for reigning in these overpayments, but millions of dollars in lobbying expenses by private insurance plans annually has led to Congress and past administrations protecting the overpayments year after year.
Here is an example of an ad from the dark-money group, Better Medicare Alliance, supporting increased Medicare Advantage payments.
Even before the Administration decided to add $13 billion in additional payments to MA plans, JEC shows how MA overpayments have increased Medicare Part B premiums for Medicare beneficiaries, even for those who stayed in traditional Medicare.
Source: Joint Economic Committee. (2026, Mar. 10). The Part B Premium Pass-Through: Medicare Advantage Overpayments Inflate Premiums for All.
The lobbying campaign and its accompanying ads have been effectively paid for by both Medicare enrollees and by your tax dollars.
Considering that I am a child advocate, one might wonder what this has anything to do with children. I would argue it impacts child policy in at least two ways:
First, while Medicare Advantage overpayments continue to grow rapidly, children’s programs are being squeezed. For example, Congress and the Trump Administration slashed Medicaid by nearly $1 trillion over the next decade in the so-called “One Big Beautiful Bill” (OBBB).
Second, the Medicare Advantage massive overpayments to insurance companies will soon be paralleled by the billions of dollars that the private entities will be receiving by OBBB’s school voucher program.
That new federal school voucher program, which was established in section 70411 of the OBBB, is a dollar-for-dollar tax credit scheme that incentivizes donations to newly established Scholarship Granting Organizations (SGOs) to distribute billions of dollars in private school vouchers. According to the Institute on Taxation and Economic Policy (ITEP), it is more generous to donors than contributions to pretty much all types of nonprofits, including children’s hospitals, veterans’ groups, and disaster relief.
We are about to witness the same playbook play out, just with different victims.
One program exploits seniors and people with disabilities. The other exploits kids.
What is common is that both extract billions from taxpayers through intermediaries who contribute nothing to the actual care or education being delivered. Both manufacture a propaganda apparatus to protect the money flow.
And in both cases, the public programs left behind – traditional Medicare and public schools – serve the people the private entities don’t want, get blamed for struggling to provide health and education services to those with greater needs, and are denied any comparable platform to defend themselves.
This is not a coincidence. It is a unified grift and part of the “organized abandonment” agenda being pursued at the expense of both senior citizens and children.
Part One: The Medicare DisAdvantage Machine
The Overpayments Are Staggering, and the Industry Just Got More
The Medicare Payment Advisory Commission (MedPAC), the independent congressional agency that advises Congress on Medicare, estimated that Medicare Advantage plans will be overpaid by roughly $76 billion in 2026 alone. If those overpayments continue, the Committee for a Responsible Federal Budget (CRPB) estimates they will total $1.3 trillion through 2036.
Rather than addressing this problem, on April 6, 2026, the Trump administration made it worse. As noted before, after a months-long, highly visible pressure campaign by the insurance industry — including thousands of identical comments generated by industry trade and front groups like America’s Health Insurance Plans and the Better Medicare Alliance – the Trump Administration is delivering $13 billion more than the industry had been promised.
This is how the machine works, and Rep. Alexandria Ocasio-Cortez (D-NY) called it out in this exchange at a House hearing with Department of Health and Human Services Secretary Robert F. Kennedy, Jr.
The industry presses Congress and the Administration. Millions of dollars in ads are run with senior citizens, in breathless voices, calling on the federal government not to cut their earned benefits and services. Congress and the Administration yield to the pressure. Additional overpayments are made. Any independent agency or congressional reformer that tries to claw back overpayments gets buried under an avalanche of industry-funded messaging. In his exchange with Rep. Ocasio-Cortez, Secretary Kennedy implied he simply had no choice other than to give them the extra $13 billion.
To understand why this matters, you need to understand what Medicare Advantage overpayments actually are – and they are not complicated.
Traditional Medicare pays doctors and hospitals for the services they actually deliver. Medicare Advantage, by contrast, pays private plans a fixed monthly amount per enrollee, adjusted for how sick each enrollee appears to be. Plans typically enroll healthier Medicare enrollees, and so, are supposed to receive larger payments for sicker patients. They have maximized efforts to make patients appear as sick as possible on paper, regardless of their actual health.
MedPAC calls this “coding intensity.” MA plans record more health condition diagnoses than traditional Medicare for comparable beneficiaries, inflating their payments. They are working hard and spending lots of money to keep those overpayments.
The second driver is favorable selection: MA plans tend to enroll beneficiaries who are healthier and more profitable than those who choose traditional Medicare, even after accounting for risk scores. MedPAC concluded that between upcoding and favorable selection, MA plans were paid $83 billion, or 22%, more than Medicare would have paid for those same people in traditional fee-for-service in 2024.
The Gym Membership Is a Sorting Mechanism
How do private plans recruit the healthiest, most profitable seniors without technically breaking the rules? They can’t deny enrollment based on health status. Therefore, they do something subtler: they design their benefits to attract people who are healthy and repel those who are not.
The gym membership is the emblematic example.
According to KFF, 98% of individual MA plans offer a fitness benefit, which involves free or discounted access to thousands of gym locations nationwide. These programs are heavily marketed as generous extras. What gym memberships actually create is market segmentation.
A study published in the New England Journal of Medicine by Brown University researchers found that once Medicare Advantage plans started covering health club memberships, they enrolled seniors with better overall health, fewer restrictions in physical activity, and less difficulty walking compared to control plans that did not offer the benefit.
Plans may also selectively market their coverage to healthy or active persons by sponsoring community-based events, thereby avoiding persons who are homebound. They may also emphasize benefits that appeal to healthier persons – sports medicine clinics, dental, vision – while only minimally advertising prescription drug benefits that would appeal to persons with chronic conditions.
The person who goes to the gym does not represent a profitable MA enrollee because of the gym. They are a profitable enrollee because they are healthy enough to go to the gym. The benefit is bait. According to study co-author Amal Trivedi:
Offering a fitness membership does not mean that you are denying people coverage, but you are changing your benefits to appeal selectively to people who are healthy.
Who ends up with the higher cost patients that private plans don’t want? Traditional Medicare, which cannot run ads or market its services, cannot offer gym memberships, and cannot hire lobbyists. Consequently, traditional Medicare carries a disproportionately sicker population, which its critics then try to use to criticize the program as “inefficient.”
The Private Sector Chooses, While the Public Sector Takes Everyone
The result of this cream-skimming is predictable and by design. Medicare Advantage plans cannot deny enrollment outright, but through benefit design, selective marketing, prior authorization requirements, and restricted provider networks, they effectively sort their membership toward healthier, lower-cost beneficiaries. People with serious illness, multiple chronic conditions, or complex disabilities disproportionately end up in traditional Medicare, which has no tools to push back.
This is not incidental. It is the business model.
And it has a precise parallel in the school voucher system. Despite the rhetoric of parental choice, it is private schools -- and not parents – that ultimately control who gets in. A 2016 Government Accountability Office report found that of all voucher programs nationwide, only four required private schools to accept all students with vouchers, space permitting. The rest allowed private schools to deny admission based on disciplinary history, academic achievement, and religious affiliation.
Private schools accepting taxpayer-funded vouchers frequently deny admission to LGBTQ students and students with disabilities. Unlike public schools, private voucher schools are generally not required to comply with the Individuals with Disabilities Education Act (IDEA). Public schools must provide every child with a disability a free and appropriate public education. When a family uses a voucher, those federal protections do not follow the child into the private school.
The pattern is the same in both programs: the privately subsidized option selects the easiest, least costly participants. The publicly accountable option — traditional Medicare and public schools — must take everyone else. That concentration of high-need individuals in public programs then becomes the pretext for calling those programs inefficient, expensive, and in need of further privatization.
It is a self-fulfilling prophecy, and it is engineered to be one.
Part Two: The Voucher Grift – Same Playbook, Different Victims
On July 4, 2025, President Trump signed the so-called “One Big Beautiful Bill” into law, creating the first federal private school voucher program in American history. The timing, Independence Day, was deliberate political theater. So was the framing for the new voucher program: parental choice, educational freedom, rescuing children from failing schools.
What actually passed was a dollar-for-dollar federal tax credit for the first $1,700 a taxpayer contributes to scholarship-granting organizations (SGOs) that distribute private school tuition vouchers. There is no other cause – certainly not children’s hospitals, cancer treatment, veterans groups, or disaster relief that taxpayers can contribute to and have the entire cost reimbursed by the federal government. The credit is roughly three times as generous as what donors get for contributing to a children’s hospital.
The notion that this is “free money” an funded by private donors is false. The tax scheme is uncapped and unlimited, entirely on the dime of the taxpayer. Furthermore, the beneficiary of the tax credit is not the child or parents. It is the donor, the SGO, and the private entities receiving the money.
The money flow is a convoluted one: from the federal Treasury, through a donor, and through an intermediary Scholarship Granting Organization (SGO), which can also rake 10% of the money it raises, and finally to many private schools operating outside the accountability requirements that govern the institutions educating 90% of American children. There will be many people makes billions of dollars – all in the name of kids.
The Joint Committee on Taxation (JCT) estimated the program will cost at least $26 billion over the next decade, but ITEP is projecting costs as high as $51 billion annually, since the final bill contained no aggregate cap.
This is not a scholarship program. It is a publicly subsidized private revenue pipeline, wrapped in the language of helping children. Kids deserve better.
The Mechanics of the Subsidy
To appreciate the audacity of this structure, consider how it compares to other forms of charitable giving. When someone donates $1,000 to a food bank or a veterans’ organization, they typically save perhaps 33 cents in taxes on each dollar given — a tax deduction. Under the new voucher program, a donor who gives $1,700 to an SGO pays nothing — the federal government covers the entire contribution through a dollar-for-dollar tax credit. The donor is made completely whole.
Data obtained by ITEP from tax agencies in Arizona, Louisiana, and Virginia tells the story plainly: in Arizona, 60% of voucher tax credits flow to families earning over $200,000 a year. In Virginia, it is 87%, and in Louisiana, it is an astounding 99%.
These are not scholarships for struggling families. They are tax shelters for wealthy ones. The federal programs sets eligibility at 300% of area median income – a threshold so high that, in affluent metro areas, it becomes almost meaningless as a poverty screen. In some areas, the ceiling reaches as high as $585,000. These are not families in need of public assistance. They are, in many cases, families already paying private school tuition, and now taxpayers will be helping cover the bill.
The intermediary organizations – the SGOs – sit between the tax credit and the child’s education, taking 10% administrative fees along the way. The private schools themselves receive public-derived funds while remaining free from the civil rights laws, disability protections, curriculum standards, and accountability requirements that apply to public schools.
If a private school scholarship is set at a fixed amount, the incentive is to serve the least expensive children. Like Medicare Advantage plans do with respect to senior citizens and people with disabilities, they will seek less costly and easier to educate kids. The new voucher program, however, is even worse, and there are no accountability measures whatsoever to ensure that participating students receive a high-quality education.
Just as the Medicare Advantage industry employs lobbyists and media consultants to protect overpayments, the school voucher movement has already employed something analogous: a well-funded influence operation designed not to improve public schools but to make people doubt them.
The Asymmetry That Makes the Grift Work
The private actors in both systems have billions of dollars in profit motive to protect their subsidies through advertising and lobbying, while the public systems they feed off have no comparable capacity to respond.
Medicare Advantage plans collectively spend hundreds of millions on marketing and lobbying. The Better Medicare Alliance, AHIP, and individual insurers flood congressional offices with constituent outreach and economic threat narratives. They hire the former government officials who wrote the regulations. They mobilize their enrolled members to contact their representatives. And they do it every single time any type of reform is proposed.
John Oliver did a terrific job highlighting this problem on HBO’s Last Week Tonight this past October.
In sharp contrast, traditional Medicare does not advertise. It cannot.
Meanwhile, groups like the American Federation for Children have spent tens of millions over decades pushing state voucher legislation and funding candidates who support privatization. The Heritage Foundation, America First Policy Institute, Moms for Liberty, and a constellation of state-level think tanks generate a continuous stream of research validating the voucher agenda.
In contrast, public schools do not have a lobbying shop with that kind of reach. They have teachers who stay late to grade papers.
The result is a permanent information asymmetry that shapes public perception. Most seniors do not know that traditional Medicare has lower administrative costs, lower denial rates, and — for people with serious illness — often better access. Most parents do not know that every time vouchers were put to a popular vote that voters rejected them by large margins. The public does not hear that voucher programs often reject students with disabilities.
The Same Machine
The political coalition that protected Medicare Advantage overpayments is the same type of coalition that has promoted and will tout the federal school voucher program. The same think tanks provide the intellectual cover. The same set of donors fund both efforts. The same language — choice, freedom, government failure — is deployed in both contexts. The same strategy of using a slice of public subsidy to fund propaganda against the public systems being looted is running in both.
And just like Medicare DisAdvantage plans, school voucher programs have been proven to fleece state taxpayers, and now they will fleece federal taxpayers at an enormous cost.
What is consistent across both programs is this: the private actors capture the public subsidy, cream-skim the most profitable participants, leave the hardest cases to the public system, use the profits to run campaigns discrediting that public system, and then point to the struggling public system as evidence that privatization was necessary all along.
It is organized abandonment dressed in the language of liberation.
Seniors didn’t ask to be exploited. Children didn’t ask to be profit centers. Taxpayers didn’t agree to fund a permanent wealth transfer to private intermediaries disguised as health and education policy.
But here we are.
What You Can Do
For child advocates, urge your senators to cosponsor the Keep Public Funds in Public Schools Act (S. 4297) by Sens. Mark Kelly (D-AZ) and Mazie Hirono (D-HI).
You can also support our work by becoming a paid subscriber to Kids Can’t Wait or to the First Focus on Children page.