The answer isn’t just “inflation.” A major shift in how healthcare is delivered is quietly driving up your Medigap bill — and most people don’t see it coming.
- average 10%- Part B premium increase for 2026
- 73% Rise in outpatient spending (2012–2022)
Healthcare has quietly moved outside the hospital.
Two decades ago, a knee replacement or cardiac procedure meant a multi-day hospital stay. In the past, hospitals performed these procedures during inpatient stays covered under Medicare Part A. Today, providers perform many of the same procedures in outpatient centers and bill them under Medicare Part B — the portion Medicare Supplement plans help cover.
This shift sounds like progress (and often is — recovery is faster, scheduling is easier). But it has dramatically increased the volume and cost of Part B claims.
Procedures now commonly done on an outpatient basis include:
- Joint replacements
- Spine procedures
- Cataract surgery
- Cardiac procedures
- Cancer infusions
- Pain management
- Advanced imaging
- Minimally invasive surgeries
The result? Medicare outpatient spending rose roughly 73% from 2012 to 2022, and MedPAC reported it continued climbing strongly in 2024 and 2025.
The site-of-service problem: same procedure, very different bill
Most people don’t realize that Medicare can pay significantly different amounts for the exact same procedure depending on where doctors perform it.
Hospital outpatient departments charge substantially more than ambulatory surgery centers (ASCs) or physician offices. In some cases, an ASC charges half of what a hospital outpatient department bills for the same surgery.
To make it worse, many hospitals have bought up physician practices in recent years — and now bill those services under hospital outpatient pricing. More procedures, at higher rates.
The bottom line
“Medicare Part B inflation becomes Medicare Supplement inflation.”
Because Plan G (and similar Medigap plans) cover the 20% Part B coinsurance, every dollar that outpatient costs rise flows directly through to Medigap carriers — and then to your premium.
Four forces are pushing Part B costs higher
- 1 Outpatient care volume is surging. CMS keeps approving more procedures for outpatient settings, making them easier to schedule. More eligible seniors, more procedures performed.
- 2 Specialty drug costs are exploding. Part B covers physician-administered drugs — including cancer treatments, rheumatoid arthritis biologics, retina injections, and immunotherapy. Spending on outpatient drugs reportedly grew from roughly $256 million in 2019 to over $10 billion in 2024.
- 3 Medical inflation is real. CMS raised outpatient hospital and ASC reimbursement again for 2026 due to hospital labor costs, staffing shortages, and supply chain pressure.
- 4 Baby Boomers are entering Medicare. A larger, older population means more imaging, more orthopedic procedures, more cancer treatment, and more chronic disease management.
Why Medigap carriers feel it even more than you’d expect
There’s a compounding dynamic at work. Many healthier, younger Medicare beneficiaries are choosing lower-premium Medicare Advantage plans. That means the pool of people remaining on traditional Medicare Supplement tends to be older and uses more outpatient services.
Insurance carriers now cover an older, higher-utilization population, which drives Medicare Supplement premiums even higher beyond outpatient cost growth alone.
This is why many insurers are now posting high single-digit increases — and double-digit increases on older Plan G and Plan F blocks.
What should you do about it?
Understanding why premiums rise is the first step to managing them. With renewals climbing, it’s worth reviewing your coverage annually rather than letting it auto-renew.
At Solid Health Insurance, we understand how frustrating it is to see your premium climb year after year- especially when every carrier seems to be raising the rates at the same time. The truth is, increases are happening across the board, but that doesn’t mean you’re stuck paying more than you have to. Carriers financial stability, claims processing reliability, and the quality customer service matter just as match when your health coverage is on the line. At Solid Health Insurance we compare top-rates carriers across all of these factors to find the plan that truly fits your budget and medical needs.
