KFF Series Examines What Insurer Overhead Buys Enrollees

A new video published Sept. 10, 2026, by the Kaiser Family Foundation (KFF), a nonprofit health policy research organization, asks a question every Medicare shopper eventually runs into: how much of a premium dollar goes to insurer overhead and profit, and what does that spending actually buy? The video is the second entry in a three-part series by KFF's Larry Levitt on the economics of health insurance, and it compares administrative costs and profit margins across private insurance and Medicare, then considers what a Medicare-for-all system, one run directly by the federal government, would address and what it might leave unresolved.

KFF frames the core issue directly: "The question isn't just whether they profit, but also whether we're getting value in return," according to the source description accompanying the video. Readers can watch the full video at KFF's site: What Do We Get for the Cut Health Insurers Take? For readers weighing Medicare options, that value question isn't academic. It shapes premiums, benefit design, and provider networks every year.

Why This Matters for Medicare Advantage Enrollees in 2026

More than half of all Medicare beneficiaries are now enrolled in Medicare Advantage, the privately run alternative to traditional Medicare, according to the Centers for Medicare & Medicaid Services (CMS). Because private insurers administer those plans, the overhead-and-profit question KFF raises applies directly to millions of enrollees' monthly costs and benefits.

Federal rules already limit how much insurers can keep. Under CMS's medical loss ratio (MLR) requirement, a Medicare Advantage insurer must spend at least 85% of the premium revenue it collects on medical care and quality improvement activities each year, and must repay CMS the shortfall if it spends less. That rule doesn't answer whether enrollees get good value for their money, the question at the heart of KFF's analysis, but it does cap how much can go to administration, marketing, and profit before triggering a financial penalty.

Traditional Medicare operates differently. It's run directly by the federal government, and CMS's Office of the Actuary has long reported its administrative costs at a low single-digit share of total program spending, well below the overhead built into many private insurance products. That gap is part of why Medicare-for-all proposals, the subject KFF's video also weighs, keep resurfacing in health policy debates: a single government-run system could reduce administrative duplication, but it would not, on its own, resolve every cost pressure in health care, including the prices providers charge and how much care patients use.

Key Takeaway

The 85% medical loss ratio rule means Medicare Advantage insurers must return money to CMS if they spend less than that share of premiums on care and quality improvement. But meeting that floor doesn't guarantee a plan delivers strong service or benefits, so compare star ratings and covered benefits, not just the premium, before you enroll.

Steps to Take Before Medicare's 2026 Enrollment Period

Medicare's Annual Enrollment Period runs Oct. 15 through Dec. 7, 2026, for coverage that takes effect Jan. 1, 2027. That window is when the overhead-and-value question KFF raises becomes a personal decision for millions of households. A few concrete steps can help:

Compare CMS Star Ratings, not just premiums. CMS scores Medicare Advantage and Part D plans on a 1-to-5 scale for quality and member experience; a low premium doesn't guarantee good service, and a higher-rated plan can be worth a higher cost.
Ask what extra benefits a plan offers. Insurers that spend above the 85% MLR floor sometimes direct that money into supplemental benefits like dental, vision, or hearing coverage rather than returning it to CMS, so compare what's actually included.
Recheck networks and drug coverage every year. Provider networks, formularies, and prior authorization rules can change annually, and those changes affect what a plan is worth to you even if the premium doesn't move.
Get a free, unbiased comparison. A licensed insurance agent or your State Health Insurance Assistance Program (SHIP) can walk through plan options at no cost before enrollment closes Dec. 7, 2026.

KFF's series doesn't argue that insurer profit is improper, and this analysis isn't making that claim either. The video asks whether the administrative cut insurers take translates into value for enrollees. That's the right question to bring into this fall's Medicare enrollment season, alongside star ratings, provider networks, and prescription drug formularies. Readers can review KFF's full analysis in the video linked above for additional context on the series.