Should Medicare Cover Golf Fees?

Medicare is supposed to fund health-care services for elderly and disabled Americans. But poorly structured payments for Medicare Advantage—a program that pays private insurers to manage seniors’ health coverage—have led to taxpayer dollars increasingly being used for non-medical perks like golf equipment, ski passes, and pet supplies.

Medicare Advantage was intended to be a cost-saving alternative to traditional Medicare. But overpayments to plans have left taxpayers on the hook for an additional $1 trillion over the next decade. If Republicans want to make a real dent in the budget deficit—and head off Democratic plans to redirect the savings into expanding other social programs—they should move to rein in payments and use the savings to ease the burden on taxpayers.

The nature of Medicare Advantage benefits currently on offer suggests something is amiss. For instance, Clever Care’s Medicare Advantage plan pays for greens fees at Los Serranos Golf Club in Southern California’s Chino Hills, as well as at six other courses in the Los Angeles area. In Utah, Select Health advertises payment for “activities to help [Medicare beneficiaries] live a healthier life,” such as “ski passes at resorts around the country” including “day passes for hitting black diamond runs.”

Across the country, Humana promises coverage for “pet food, pet toys, kitty litter and flea shampoo.” Nationally, 172 Medicare plans pay for hairstyling and beauty services, while others reimburse entry fees for social clubs or hunting licenses.

Access to these perks is common. In 2024, 10 million Medicare beneficiaries were entitled to non-medical “supplemental benefits” as part of their coverage. This year, 48 percent of Medicare Advantage plans will feature “flex cards,” offering an average benefit of $966 to enrollees. The federal government, meantime, has little idea exactly what it’s paying for.

Ironically, Medicare Advantage began as an attempt to reduce Medicare costs. The federal government previously paid separately for each physician visit, hospitalization, drug, and diagnostic test incurred, inflating the volume of low-value medical services. Medicare Advantage sought to avoid this—and to reward the cost-effective coordination of preventive care—by paying private insurers up front to deliver all covered Medicare benefits to enrollees.

By the mid-2010s, Medicare Advantage was achieving considerable success. It forestalled costly hospitalizations and improved patients’ health outcomes. Plans generated savings by eliminating needlessly costly procedures, using the funds to attract beneficiaries by offering lower premiums, out-of-pocket costs, and “supplemental benefits.” Enrollment rose steadily.

Medicare Advantage’s supplemental benefits were originally limited to “health related” goods and services, such as dental care. But the Bipartisan Budget Act of 2018 allowed plans to offer any supplemental benefits with a “reasonable expectation of improving or maintaining the health or overall function” of chronically ill enrollees. These Special Supplemental Benefits for the Chronically Ill (SSBCI) would not need to be “primarily health related” or associated with hospitalizations, but could also be used to pay for groceries, utilities, education, sporting, and social activities—because they might yield incidental benefits to health.

Assuming that up-front payments to plans would not be changed and that uptake would be limited, the Congressional Budget Office estimated that SSBCI would not increase costs to taxpayers. Yet, as 93 percent of Medicare beneficiaries have one or more chronic conditions, eligibility for SSBCI benefits has grown rapidly. Payments to plans have also gone up.

In 2023, Uncle Sam paid Medicare Advantage plans an average of $14,380 per beneficiary, adjusting for individuals’ expected health-care needs. This has led to plans being increasingly extensive in documenting their enrollees’ medical diagnoses, in order to obtain higher payments, including for ill-defined conditions for which claims are hard to challenge.

The Medicare Payment Advisory Commission, an independent agency established by Congress, notes that the imperfect categorization of medical needs means that the program currently “overpays for beneficiaries who have very low costs and underpays for beneficiaries who have very high costs.” This is why Medicare Advantage plans are eager to offer costly supplemental benefits that are disproportionately attractive to physically active enrollees. Purchasing new golf clubs for Medicare beneficiaries with diabetes won’t reduce their risk of costly hospitalizations, while paying for their ski passes may actually increase it. But doing so will encourage the relatively healthy among them to enroll in plans.

Because of these “coding and selection” effects, from 2015 to 2024, Medicare payments to Medicare Advantage plans rose from 112 percent to 120 percent of what the program would have spent just purchasing medical services for beneficiaries directly. Over that time, overpayments to plans surged from $18 billion to $77 billion per year. Much of this largesse was spent expanding “supplemental benefits” from $960 to $2,520 per beneficiary. But it has also served to swell insurers’ profits.

The Committee for a Responsible Federal Budget estimates that overpayments to Medicare Advantage will cost $1.2 trillion over the next decade. That’s more than ten times the likely savings generated by the Department of Government Efficiency.

In his confirmation hearing to head Medicare, Mehmet Oz endorsed the suggestion that cutting Medicare Advantage overpayments would be a better way to finance the extension of President Trump’s tax cuts than trimming Medicaid—winning him plaudits from Democratic Senator Elizabeth Warren. Leading Republicans Senator Bill Cassidy and Representative Greg Murphy have also advocated this approach.

Medicare benefits already greatly exceed seniors’ premiums and prior tax contributions to the program, and retirees are substantially wealthier than working Americans. Democrats had proposed cutting overpayments to Medicare Advantage to fund expansions of other social welfare programs. They haven’t abandoned those plans. Republicans would do well to capture the savings first and use it to reduce the burden on working taxpayers.

Photo by Rick Loomis/Los Angeles Times via Getty Images